SECURITIES AND EXCHANGE
COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K

|    | (Mark one)                                                                              
|--- | ----------------------------------------------------------------------------------------
|    |                                                                                         
|(X) | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF EXCHANGE ACT OF 1934                   
|    | For the fiscal year ended December 31, 2004 or                                          
|    |                                                                                         
|    | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|    |                                                                                         
|    | For the transition period from____________________to__________________                  
|    |                                                                                         
|    | Commission file number I-91                                                             

Furniture Brands International, Inc.(Exact Name of registrant as specified in its charter)

|Delaware                                           |  | 43-0337683         
|-------------------------------------------------- |  | -------------------
|(State or other jurisdiction of                    |  | (I.R.S. Employer   
|incorporation or organization)                     |  | Identification No.)
|                                                   |  |                    
|101 South Hanley Road, St. Louis, Missouri         |  | 63105              
|(Address of principal executive offices)           |  | (Zip Code)         
|                                                   |  |                    
|Registrant's telephone number, including area code |  | (314) 863-1100     

SECURITIES REGISTERED
PURSUANT TO SECTION 12(B) OF THE ACT:

|                                     |  | Name of each exchange on
|------------------------------------ |  | ------------------------
|Title of each class                  |  | which registered        
|Common Stock - $1.00 Stated Value    |  | New York Stock Exchange 
|with Preferred Stock Purchase Rights |  |                         

SECURITIES REGISTERED
PURSUANT TO SECTION 12(G) OF THE ACT:

None
                                                 (Title of Class)

Indicate
by check mark  whether the  registrant  (1) has filed all reports  required to be filed
by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the  preceding
 12 months,  and (2) has been subject to such filing requirements for the past 90 days.
    Yes X             No_____

Indicate
 by check  mark if  disclosure  of  delinquent  filers  pursuant  to Item 405 of
 Regulation  S-K is not contained herein,  and will not be contained,  to the best of
registrant's  knowledge,  in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K (X)
    Yes X             No_____

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Exchange Act
Rule 12b-2).    Yes X             No_____

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The
 aggregate  market  value of the voting stock held by  non-affiliates  of the  registrant
 as of June 30, 2004, was approximately $1,363,217,700.

Indicate
the number of shares  outstanding of each of the registrant's  classes of common stock,
as of the latest practicable date.

56,482,541 shares as of
February 28, 2005

DOCUMENTS INCORPORATED
BY REFERENCE

Portions of Definitive Proxy
Statement for Annual Meeting                       of Stockholders on April 28,
2005.................................................................    Part III

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PART I

Item 1.    
 Business

(a)    General
Development of Business

On February 10, 2004,  the Company
 announced the election of John T. (Tom) Foy as President and Chief  Operating  Officer
of the Company.

On February 13, 2004, the Company
 announced the  appointment of Randall C. (Randy) Spak as President and Chief  Executive
Officer of Lane Furniture Industries, Inc., a subsidiary of the Company.

On June 24, 2004, the Company
announced that,  effective  immediately,  the Pearson Company operations will report
through Henredon Furniture Industries, Inc. rather than through Thomasville Furniture
Industries, Inc.

On September 3, 2004, the Company
 announced,  effective  October 30, 2004,  the  appointment of Stephen K. McKee as Chief
Executive Officer of Henredon Furniture Industries, Inc., a subsidiary of the Company.

On January 28, 2005,  the Company
 announced,  effective  February 7, 2005,  the  appointment of Denise L. Ramos as Senior
Vice President, Treasurer and Chief Financial Officer of the Company.

(c)     Narrative
Description of Business

The  Company,  one of the largest
 manufacturers  of  residential  furniture  in the United  States,  markets its products
through  its  four  operating  subsidiaries:  Broyhill  Furniture  Industries,  Inc.;
 Lane  Furniture  Industries,  Inc.; Thomasville Furniture Industries, Inc., and HDM
Furniture Industries, Inc.

PRODUCTS

The Company  manufactures  and
distributes (i) case goods,  consisting of bedroom,  dining room and living room
furniture, (ii) stationary upholstery products,  consisting of sofas,  loveseats,
 sectionals and chairs, (iii) occasional furniture, consisting of wood, metal and glass
tables,  accent pieces,  home  entertainment  centers and home office furniture,  (iv)
recliners,  motion  furniture and sleep sofas,  and (v)  accessories.  The Company's
 brand name  positioning by price and product category is shown below.

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|            |                 |                 | UPHOLSTERY      |            
|----------- | --------------- | --------------- | --------------- | -----------
|
|
|            |                 |                 |                 |            
|            |                 |                 |                 |            
|PREMIUM     | Henredon        | Henredon        | Henredon        |            
|            | Drexel Heritage | Drexel Heritage | Drexel Heritage |            
|            | Maitland-Smith  | Maitland-Smith  | Maitland-Smith  |            
|            | Hickory Chair   | Hickory Chair   | Hickory Chair   |            
|            |                 |                 | Pearson         |            
|            |                 |                 |                 |            
|BEST        | Thomasville     | Thomasville     | Thomasville     | Thomasville
|            | Drexel Heritage | Drexel Heritage | Drexel Heritage |            
|            | Broyhill        | Broyhill        | Broyhill        |            
|            | HBF             |                 | HBF             |            
|            |                 |                 |                 |            
|BETTER      | Drexel Heritage | Drexel Heritage | Drexel Heritage | Lane       
|            | Lane            | Lane            | Lane            | Broyhill   
|            | Broyhill        | Broyhill        | Broyhill        |            
|            |                 |                 |                 |            
|GOOD        | Broyhill        | Broyhill        | Broyhill        | Broyhill   
|            | Lane            | Lane            | Lane            | Lane       
|            |                 |                 |                 |            
|PROMOTIONAL | Founders        |                 |                 |            
|            | Vignettes       |                 |                 |            
|            |                 |                 |                 |            
|RTA         | Creative        |                 |                 |            
|            | Interiors       |                 |                 |            

BROYHILL FURNITURE INDUSTRIES

Broyhill  produces  collections of
 medium-priced  bedroom,  dining room and living room furniture aimed at  middle-income
consumers.  Broyhill's wood furniture  offerings  consist of bedroom,  dining room and
living room  furniture,  occasional tables,  accent items,  free-standing home
entertainment  centers and home office furniture.  Upholstered products include sofas,
sleep sofas, loveseats,  sectionals,  chairs, and fully reclining furniture all offered
in a variety of fabrics and leathers.  Broyhill's  residential  furniture  divisions
 produce a wide range of  furnishings  in  country,  traditional, European, contemporary
and lifestyle designs.

The widely recognized  Broyhill
 trademarks include Broyhill and Broyhill  Indulgence.  The flagship Broyhill product
line concentrates  on living room,  bedroom,  dining room,  upholstered  and occasional
 furniture  designed for the "good" and "better" price categories.  The Broyhill
 Indulgence product line enjoys an excellent  reputation for highly styled,  case goods
and upholstery collections in the "best" price category.

LANE FURNITURE INDUSTRIES

Lane  manufactures  and  markets  a
broad  range of high  quality  furniture  targeting  the  "good"  and  "better"  price
categories.  Lane targets niche markets with its three  operating  divisions,  which
 participate  in such segments of the residential furniture market as reclining chairs
and motion furniture, cedar chests and wicker and rattan.

Lane's  upholstery  division
 manufactures  and markets  reclining  chairs and motion furniture in the "good" and
"better" price categories under the Lane brand name. Motion furniture  consists of sofas
and loveseats with  recliner-style  moving parts and comfort  features.  Other
 upholstered  furniture  consists of wall saver recliners,  pad-over chaise recliners,
hi-leg  recliners,  sleep  sofas and motion  sectionals.  Royal  Development  Company,  a
division  of Lane,  designs  and manufactures  the mechanisms  used in Lane's  reclining
 furniture  products.  The Lane Leather  collection  represents an important  source of
growth for Lane's  upholstery  division,  as leather is the  fastest-growing  category in
upholstered furniture.  The collection,  priced in the "better" category comes in

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three styles - American ranch,
 American traditional and urban  contemporary.  Lane has also recently  introduced a
stationary line of upholstered  furniture which is enjoying good success.

Lane's wood  furniture  division
 markets  cedar chests,  living room,  bedroom and dining room  furniture,  wall systems,
desks,  console  tables and mirrors  and other  occasional  wood  pieces.  Sold under the
Lane brand name,  the case goods collections and individual products are sold in the
"good" and "better" price categories.

Laneventure  manufactures and
markets wicker,  rattan,  bamboo,  exposed aluminum and teak furniture,  tables,
 occasional wood  pieces  and two  lines of  upholstered  furniture  under  the
 Laneventure  brand  name.  One line is  comprised  of contemporary  and modern
 upholstered  furniture and metal and glass  occasional and dining room tables,  and the
other is comprised of  traditional  and  contemporary  upholstered  furniture,  primarily
 sofas,  loveseats,  chairs and ottomans. Laneventure also manufactures  outdoor and
patio furniture featuring fast drying upholstered  cushions under the sub-brand name
WeatherMaster, which has developed significant consumer acceptance.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville  manufactures and
markets wood furniture,  upholstered  products and  promotional/RTA  furniture.
 Thomasville markets its products  primarily  under the  Thomasville  brand name, and has
several other divisions which market products under  separate  brands.  Thomasville
 offers an  assortment of upholstery  and wood  furniture  under one brand name that
targets  the "best"  price  category.  Upholstery  is  primarily  marketed in three major
 styles:  traditional,  American traditional/country  and casual/lifestyle  contemporary.
 Upholstery style is determined by both frame style and fabric or leather  selection.
 Thomasville's  frame assortment allows the consumer to select from a wide variety of
different styles within the general style  categories,  and as much as 45% of the
Thomasville  fabric and leather  offering changes in a 12 month period,  insuring that
the latest colors and textures are available.  Wood  furniture is primarily  marketed in
four major styles: American traditional/country, 18th century, European traditional and
casual contemporary.

HBF manufactures and sells a line of
office furniture,  including chairs, tables,  conference tables, desks and credenzas, in
the upper-middle price range.

Founders offers assembled bedroom
sets,  bookcases and home  entertainment  centers under the Founders and Vignettes brand
names to a variety of  retailers  for sale to  consumer  end-users  and certain  contract
 customers.  Creative  Interiors markets RTA  (ready-to-assemble)  furniture such as home
entertainment  centers,  bookcases,  bedroom and  kitchen/utility furniture and computer
desks under the Creative Interiors brand name.

HDM FURNITURE INDUSTRIES

HDM  Furniture  Industries  has
three  operating  subsidiaries:  Henredon  Furniture  Industries,  Inc.,  Drexel
 Heritage Furniture Industries, Inc. and Maitland-Smith Furniture Industries, Inc.

Henredon  manufactures and markets
living room, bedroom,  dining room, occasional and upholstered furniture in the premium
price  category.  Henredon  markets its furniture in 14  collections  and is the
 furniture  licensee for the Ralph Lauren Home  Collection  and Historic  Natchez.
 Henredon is an industry  style and fashion leader and provides the consumer with unique
and distinct  products  ranging from  contemporary  to  traditional.  An agreement was
signed in 2003 to launch the Barbara Barry brand in 2005.

Hickory Chair, an operating division
of Henredon,  manufactures and markets  traditional styles of upholstered  furniture,
dining room and bedroom  collections and occasional tables in the "premium" price
 categories.  The Hickory Chair division has been crafting fine  reproductions of 18th
century  furniture for over 80 years. For example,  Hickory Chair offers the James River
collection which features  reproductions of fine furnishings from Virginia  plantations,
 and the Mount Vernon collection,  which features  reproductions  from George
 Washington's  home. In October 2000, Hickory Chair introduced its Thomas O'Brien
 collection,  which includes  upholstery,  chairs,  tables, beds and cabinetry in
O'Brien's acclaimed "warm modernist" style.

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Pearson,  an operating  division of
Henredon,  has been  manufacturing and selling  contemporary and traditional styles of
finely  tailored  upholstered  furniture  including  sofas,  loveseats,  chairs and
 ottomans  for over 50 years.  Pearson furniture sells in the "premium" price category
and is distributed to high-end furniture stores and interior designers.

Drexel Heritage  launched its new
 tri-branding  strategy in 2002,  marketing case goods and  upholstered  furniture under
three distinct brands:  Heritage,  Drexel and dh. The price categories range from "mid to
upper premium," targeting female consumers from 27-year-olds to 50-plus,  with
beautifully made and designed  products.  Furniture styles range from French and European
 traditional to  contemporary  and  transitional.  Drexel  Heritage also  manufactures
 and markets a line of sophisticated  and elegant  upholstery  and case goods under the
 Lillian  August  brand and  produces  furniture  for the hospitality and government
markets.  Drexel Heritage currently produces  approximately 25 collections with four to
six new collections offered each year.

Maitland-Smith is a leading designer
and manufacturer of "premium" hand crafted,  antique-inspired furniture,  accessories and
lighting,  utilizing a wide range of unique materials,  including  distinctive leather,
 fancy faced veneer, stone and hand-painted  metal.  Maitland-Smith  markets under the
Maitland-Smith  and LaBarge brand names. The Maitland-Smith  brand is  inspired  by
designs  from the master  craftsmen  of 17th,  18th and 19th  century  England.  The
 LaBarge  brand name emphasizes Continental European design in mirrors and occasional
furniture.

DISTRIBUTION

The  Companys  strategy of
targeting  diverse  distribution  channels  such as furniture  centers,  independent
 dealers, national and local chain stores,  department  stores,  specialty stores and
decorator  showrooms is supported by dedicated sales forces  covering each of these
 distribution  channels.  The Company  continues to explore  opportunities  to expand
international sales and to distribute through non-traditional channels such as wholesale
clubs and catalog retailers.

The Companys breadth of product and
national scope of distribution  enable it to effectively  service national  retailers
such as J.C. Penney and key regional  retailers such as Havertys,  Raymour & Flanigan,
 Bloomingdales,  Marshall Fields, Dillards,  Baers and  Kittles.  The  consolidation
 of the retail  residential  furniture  industry  has made access to distribution
 channels  an  important  competitive  advantage  for  manufacturers.  The Company  has
 developed  dedicated distribution  channels by expanding its gallery  programs and the
network of  independent  dealer-owned  dedicated  retail locations,  such as Thomasville
Home Furnishings  Stores,  Drexel Heritage Home Inspiration  Stores,  Lane Home
Furnishing Stores,  and Broyhill Home Collections  Stores.  The Company primarily
 distributes its products through a diverse network of  independently  owned retail
 locations,  which includes 229  freestanding  stores,  1,088  galleries and 768
furniture centers.

Broyhill,  Lane,  Thomasville and
Drexel Heritage have all developed  gallery programs with dedicated  dealers  displaying
furniture in complete room ensembles.  These retailers  employ a consistent  showcase
gallery concept wherein products are displayed in complete and fully  accessorized  room
settings instead of as individual  pieces.  This  presentation  format encourages
 consumers to purchase an entire room of furniture instead of individual  pieces from
different  manufacturers. Each  operating  company  offers  substantial  services  to
 retailers  to  support  their  marketing  efforts,  including coordinated national
advertising, merchandising and display programs and extensive dealer training.

Thomasville Home Furnishings
 Stores,  Drexel Heritage Home Inspiration  Stores, Lane Home Furnishings Stores and
Broyhill Home Collections Stores are primarily  dealer-owned,  free-standing retail
locations that exclusively feature Thomasville, Drexel  Heritage,  Lane and Broyhill
 furniture,  respectively.  The Company  believes  distributing  its products through
dedicated,  single-branded  stores  strengthens  brand awareness,  provides
 well-informed and focused sales personnel and encourages the purchase of multiple items
per visit.

Showrooms for the national
 furniture  market are located in Thomasville  and High Point,  North Carolina and for
regional markets in Atlanta, Georgia; Chicago, Illinois; San Francisco, California; and
Tupelo, Mississippi.

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BROYHILL FURNITURE INDUSTRIES

Broyhill  distribution  is focused
on major  national  or  regional  chains and  dedicated  distribution  -  free-standing
Broyhill Home Collections  Stores,  Broyhill  Furniture  Showplaces and Broyhill
 Showcase  Galleries.  Each dealer in the Broyhill Showcase  Gallery,  Broyhill
 Furniture  Showplace and Broyhill Home Collections Store programs owns the Gallery,
Showplace or Home Collections Store and the Broyhill furniture inventory.

The Broyhill Showcase Gallery
program began in 1983 and now involves 255 domestic and international  participating
 dealer locations.  A Broyhill  Showcase  Gallery  consists of a minimum of 7,500 square
feet of Broyhill  furniture  displayed in complete and fully  accessorized  room
 settings.  Introduced  in 2001 as a higher level of  dedicated  distribution,  the
Broyhill  Furniture  Showplace  program now numbers 72 locations owned and operated by
retail dealers who commit a minimum of 10,000 square feet of display space to Broyhill
products.  In 2003,  Broyhill  introduced the Broyhill Home Collections freestanding
 store  concept  for retail  dealers  who, as of January 2, 2005,  commit a minimum of
15,000  square feet of display  space to Broyhill  products in a  single-branded
 environment.  In 2004,  Broyhill  opened  eight  Broyhill  Home Collections Stores
bringing the total to 9 of which one is Company-owned.  Comprehensive merchandising,
 design, marketing and advertising support programs are provided for all three dedicated
distribution programs.

For the retailer that is currently
not a participant  in the Showcase  Gallery,  Furniture  Showplace or Home  Collections
Store programs,  Broyhill offers the Broyhill  Furniture Center Program.  This concept,
 initiated in 1987, is designed to strengthen  Broyhill's  relationship  with  these
 retailers  by  assisting  them in  overcoming  some of the  significant difficulties in
running an independent  furniture  business.  The 768  participating  retailers in the
Broyhill  Furniture Center Program  commit to a minimum of at least 2,500 square feet
devoted  exclusively  to Broyhill  products  arranged in gallery-type room settings.
 This program includes additional marketing,  design and advertising  assistance.  The
Company seeks to develop these  Furniture  Center  relationships  so that some of these
 retailers may become  participants in the Broyhill Showcase Gallery, Broyhill Furniture
Showplace or Broyhill Home Collections Store programs.

LANE FURNITURE INDUSTRIES

Lane distributes its products
 nationally and  internationally  through a well-established  network of approximately
9,000 retail  locations.  A diverse  distribution  network is utilized in keeping with
Lane's  strategy of  supplying  customers with highly specialized  products in selected
niche markets.  This distribution  network primarily consists of independent furniture
 stores,  regional chains such as Havertys and Art Van, and department store companies
such as J.C. Penney,  May Department Stores, Federated Department Stores and Dillard's
Department Stores.

Lane has established  specialty
gallery programs with 501 participating  dealers.  This includes 396 dealer-owned
 Comfort Showcase  Galleries and 91 Comfort  Furnishings  Galleries  established by
Lane's  Upholstery  division.  These  galleries average  approximately  3,000 square feet
of retail space  specifically  dedicated to the display,  promotion  and sale of Lane
 upholstery  and wood  products.  Lane is  developing  its own  single-branded  stores
 program  through  independent retailers to complement  but not compete with their
 existing  distribution  networks.  Lane currently has 14 such stores, two of which are
company-owned.

THOMASVILLE FURNITURE INDUSTRIES

Thomasville  products are offered at
431 retail  locations,  including 144 Thomasville  Galleries,  157  Thomasville  Home
Furnishings  Stores of which five are  Company-owned  and 130 authorized  dealers.  The
 Thomasville  Gallery  concept was initiated in 1983.  Thomasville  Galleries  have an
average  7,500 square feet of retail space  specifically  dedicated to the display,
 promotion and sale of Thomasville  products.  The first  Thomasville Home Furnishings
 Store opened in 1988. The typical Thomasville Home Furnishings Store is a 13,000 square
foot,  independently-owned  store offering a broad range of Thomasville products,
presented in a home-like setting by specially trained salespersons.

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The Founders  division sells
 promotional  furniture to a variety of retailers for sale to consumer  end-users and
certain contract  customers.  Promotional  furniture is sold to retail chains such as
Badcock,  Value City, as well as independent furniture  stores.  Promotional  furniture
 is also sold in the  hospitality  and health  care  markets  of  Thomasville's contract
 business.  The Creative  Interiors  division sells RTA furniture to customers which
include national chains such as Target and Wal-Mart, catalog showrooms, discount mass
merchandisers, warehouse clubs and home furnishings retailers.

HDM FURNITURE INDUSTRIES

Henredon  distributes its products
through a network of approximately  450 fine furniture  dealers,  department stores and
wholesale  showrooms in this country and abroad.  The Ralph Lauren Home Collection is
also distributed  through Polo Ralph Lauren  retail  stores.  The typical  Henredon
 display is 3,000 to 8,000  square feet.  Henredon  dealers  include  Louis Shanks of
Texas, Gabberts,  Kittles,  Boyles, Robb & Stucky,  Treasures,  Marshall Fields,
 Richs, Lazarus, Macys West and  Dillards.  Hickory Chair  distributes  through
 premium-quality  dealers  including 30 gallery  locations as well as through Henredons
Interior Design showrooms.  Henredon opened its first free standing,  independently-owned
store in 2003 and plans to expand this channel of distribution over the next 3 years.
 Henredon also opened two new wholesale  showrooms during  2003 in New York and  Chicago
 and now  operates 8  wholesale  to the trade  showrooms.  Pearson  distributes  its
products primarily through premium-quality dealers and the interior design trade.

Drexel  Heritage  products  are
 offered  at 608  independently-owned  retail  locations,  including  68  Drexel
 Heritage galleries,  46 dedicated  Drexel  Heritage Home  Inspiration  stores,  one of
which is  Company-owned  and 494  authorized dealers.  Drexel  Heritage  galleries  have
an average  of 6,500  square  feet of  dedicated  space.  The  typical  Drexel Heritage
 Home  Inspiration  store is a 14,000  square  foot  independently-owned  store  offering
a broad range of Drexel Heritage products, presented in a home-like setting by a
salesperson or design consultant.

Maitland-Smith  distributes its
products  nationally and  internationally  through a well-established  network of
high-end retail  furniture  stores,  designer  showrooms,  antique  dealers and specialty
gift stores.  The dealers are selected to preserve and enhance the prestige and
reputation of the Maitland-Smith brand names.

MARKETING AND ADVERTISING

Advertising  is used to increase
 consumer  awareness of the  Company's  brand names and is targeted to specific  consumer
segments  through national and regional  television as well as leading shelter and other
popular  magazines such as Better Homes and Gardens,  Good Housekeeping and Architectural
 Digest.  Each operating company uses focused advertising in major markets to create
 buying  urgency  around  specific  sale events and to provide  dealer  location
 information,  enabling retailers to be listed jointly in  advertisements  for maximum
 advertising  efficiency  and shared costs.  Each operating company seeks to increase
 consumer buying and strengthen  relationships  with retailers through  cooperative
 advertising and selective promotional  programs,  and focuses its marketing efforts on
prime potential customers utilizing information from  databases  and from callers to each
 operating  company's  toll-free  telephone  number.  Extensive  use of Internet
web-based technology for customer and consumer awareness and service is also used by each
operating company.

BROYHILL FURNITURE INDUSTRIES

Broyhill's  advertising  programs
focus on translating  its strong  consumer  awareness into increased  sales.  Broyhill's
current  marketing  strategy features a national print advertising  program and
traditional  promotional  programs such as dealer-based  promotions  including  product
 mailings,  local  television,  newspaper and  brochures.  The national print advertising
 program,  which consists of multi-page layouts, is designed to appeal to the consumer's
desire for decorating assistance  and  increased  confidence in making the decision to
purchase a big ticket  product such as  furniture.  These advertisements  are run in
publications  such as Good Housekeeping and Better Homes and Gardens which appeal to
Broyhill's consumer base. An extensive  public relations  campaign also exposes  Broyhill
 products in leading magazine and newspaper editorial features.

---



LANE FURNITURE INDUSTRIES

Lane's marketing  approach  reflects
the diversity of its various  divisions and product lines. Lane employs an integrated
marketing/advertising  strategy in which it coordinates  magazine,  newspaper,  circular
and television  advertising  with other  marketing  programs to promote a single
 product.  Each of the Lane divisions  advertises  extensively in trade and consumer
publications targeting various niche markets.

THOMASVILLE FURNITURE INDUSTRIES

Thomasvilles  current advertising
appears on national network and cable television during peak promotional  periods.  The
campaign  emphasizes  Thomasvilles  fashion and quality  leadership  through  the use of
dramatic  commercials  featuring individual,  high quality wood and upholstery  pieces.
 National cable networks  include A&E,  Lifetime,  HGTV,  Food, The Travel Channel and
TLC.

To help retailers sell its product
through to consumers,  Thomasville  offers a full twelve-month  schedule of promotional
support which includes promotional  concepts,  selected product discounts,  cooperative
 advertising funds, and a complete advertising  package with color  newspaper  layouts
 plus radio and  television  commercials  dealers can use as supplied. Thomasville  runs
national  sales events to coincide  with major  industry sale  periods.  These events
 include  national print ads or Thomasville-designed newspaper inserts for dealer use.

Thomasville's other divisions
 (Founders and Creative  Interiors) use or participate in various  advertising
 publications throughout the year.

HDM FURNITURE INDUSTRIES

Henredons  national  advertising
 is focused  in  magazines  such as  Architectural  Digest and House & Garden.  Henredon
produces  full color  catalogs in support of each  collection  and  maintains a web site
which  provides  the consumer the opportunity to view all current collections, order
catalogs and locate dealers in their local trading areas.

Drexel Heritage offers a fully
integrated  marketing  program that includes national brand advertising and a full
calendar of  promotional  events.  These events  include themed  promotional  concepts,
 selected  product  discounts,  cooperative advertising support and a complete
advertising  marketing  portfolio.  This portfolio includes national branded television
commercials,  dealer television commercials,  consumer sales circulars,  direct mail
postcards,  newspaper advertisements, radio commercials, in-store events and a complete
in-store point of sale package.

Maitland-Smith  has chosen to do
little  advertising over the years.  This approach has created an aura of mystique around
the brand that adds to its charm and has worked well  within its dealer  base.
 Promotional  activities  with  dealers are designed to preserve and enhance
Maitland-Smith's brand name in the home furnishings industry.

MANUFACTURING

Broyhill operates 13 finished case
goods and upholstery  production and warehouse  facilities  totaling  approximately 4.6
million  square  feet.  All  finished  good  plants are  located in North  Carolina.
 Broyhill  pioneered  the use of mass production techniques in the furniture industry and
by utilizing longer production runs achieves economies of scale.

Lane  operates 8 upholstery
 production  and warehouse  facilities in  Mississippi  and North  Carolina  totaling
over 3.7 million square feet.  Significant capital expenditures have been made to acquire
 technologically  advanced  manufacturing equipment, which has increased factory
productivity as well as capacity.

Thomasville  manufactures  or
assembles its products at 12 finished  case goods and  upholstery  production  and
warehouse facilities  located in North  Carolina  and  Virginia,  totaling  approximately
 4.4 million  square  feet.

---



Each plant is specialized,
 manufacturing  premium  furniture  products  allowing more efficient  production runs
while maintaining high quality standards.

The  manufacturing  process for
 Thomasville's  Founders and Creative  Interiors  divisions  are highly  automated.
 Large fiberboard and  particleboard  sheets are  machine-finished  in long production
 runs, then stored using highly  automated assembly  lines.  Completed goods are either
 assembled  (Founders) or flat packed  (Creative  Interiors) and stored in an automated
 warehouse to provide quicker delivery to customers.  Ninety percent of Creative
 Interiors products are shipped within 14 days of production.

Henredon  manufactures in 6 case
goods and upholstery production and warehouse facilities  encompassing  approximately 2.2
million square feet all located in North  Carolina.  Henredon is a leader in cellular
 manufacturing  which allows for the efficient production of relatively small production
runs.

Drexel Heritage  operates 4 case
goods and upholstery  production and warehouse  facilities that total  approximately  1.3
million  square feet.  All  facilities  are located in western North  Carolina  except
for an upholstery  plant located in High Point,  North  Carolina.  Each facility is
 specialized to manufacture  premium  quality  furniture in a cellularized manufacturing
environment.

Maitland-Smith  and LaBarge
 products are  manufactured  at  facilities in the  Philippines  and Indonesia and by
selected sub-contractors  located throughout Asia, Italy and Mexico.  Each production
 facility utilizes  specialized  craftsmen to produce premium home furnishings products.

RAW MATERIALS AND SUPPLIERS

The raw  materials  used by the
Company in  manufacturing  its products  include  lumber,  veneers,  plywood,
 fiberboard, particleboard,  steel, paper, hardware, adhesives,  finishing materials,
glass, mirrored glass, fabrics, leathers, metals, stone,   synthetics  and  upholstered
  filling  material  (such  as  synthetic  fibers,  foam  padding  and  polyurethane
cushioning).  The  various  types of wood  used in the  Company's  products  include
 cherry,  oak,  maple,  pine,  pecan, mahogany,  alder,  ash, poplar,  and teak which are
purchased both  domestically and abroad.  Fabrics,  leathers and other raw  materials
 are  purchased  both  domestically  and  abroad.  Management  believes  that its supply
 sources for these materials are adequate.

The Company has an agreement with
Furniture Brands Import Services  Organization  (formerly Outlook  International,  Ltd.)
which is the exclusive  representative  for the Company for the manufacture of products
in the Far East.  Furniture Brands Import  Services,  an  independently  owned company,
 provides  sourcing  assistance,  product  quality  control and other import-related
services to the Company.

The Company has strategic  alliances
with several foreign  manufacturers  whereby the operating companies have the ability to
purchase,  on a coordinated basis, a significant  portion of the foreign  manufacturers'
 capacity,  subject to quality control and  delivery  standards.  While an  alliance
 represents  a  significant  portion of the  foreign  manufacturers' operations, no one
foreign manufacturer represents a material portion of the Company's consolidated import
requirements.

The Company has no long-term  supply
 contracts and has  experienced no significant  problems in supplying its operations.
Although the Company has strategically  selected suppliers of raw materials,  the Company
believes that there are a number of other sources  available,  contributing to its
ability to obtain competitive  pricing for raw materials.  Raw materials prices
 fluctuate  over time  depending  upon factors such as supply,  demand and weather.
 Increases in prices may have a short-term impact on the Company's profit margins for its
products.

The majority of raw materials for
 promotional  and RTA products are purchased  domestically,  although  paper and certain
hardware is purchased  abroad.  The Company believes,  however,  that its proximity to
and relationship with suppliers are advantageous  for the sourcing of such  materials.
 In addition,  by combining the purchase of various raw materials (such as foam, cartons,
springs and fabric) and services, the operating companies have been able to realize cost
savings.

---



ENVIRONMENTAL MATTERS

The Company is subject to a
wide-range  of federal,  state and local laws and  regulations  relating to  protection
of the environment,  worker  health and safety  and the  emission,  discharge,  storage,
 treatment  and  disposal  of  hazardous materials.  These laws include the Clean Air Act
of 1970,  as amended,  the Resource  Conservation  and Recovery  Act, the Federal  Water
 Pollution  Control Act and the  Comprehensive  Environmental,  Response,  Compensation
 and  Liability Act ("Superfund").  Certain of the  Company's  operations  use glues and
coating  materials  that contain  chemicals  that are considered  hazardous  under
 various  environmental  laws.  Accordingly,   the  Company  closely  monitors
 environmental performance  at all of its  facilities.  The  Company  believes it is in
 substantial  compliance  with all  environmental laws.  While the Company  may be
 required to make  capital  investments  from time to time at some of its  facilities  to
ensure  compliance,  the Company  believes it will continue to meet all  applicable
 requirements  in a timely fashion and that the cost required to meet these  requirements
 will not materially  affect its financial  condition or its results of operations.

The Company has been identified as a
potentially  responsible  party ("PRP") at a number of superfund  sites.  The Company
believes  that  its  liability  with  respect  to most  of the  sites  is de  minimis,
 and the  Company  is  entitled  to indemnification  by others with respect to liability
at certain  sites.  The Company  believes that any liability as a PRP with regard to the
 superfund  sites will not have a material  adverse  effect on its  financial  condition
 or results of operations.

COMPETITION

The residential  furniture
 manufacturing  industry is highly  competitive.  The Company's  products compete with
products made by a number of furniture  manufacturers,  including  La-Z-Boy
 Incorporated,  Ethan Allen  Interiors  Inc. and Ashley Furniture  Industries,  Inc.,  as
well as  approximately  600  smaller  producers.  The  elements of  competition  include
pricing, styling, quality and marketing.

EMPLOYEES

As of December 31, 2004, the Company
employed  approximately 17,800 full-time  employees.  None of the Company's employees is
represented by a union.

BACKLOG

The  combined  backlog of the
 Company's  operating  companies  as of December  31, 2004 was  approximately  $275
 million compared to approximately $312 million as of December 31, 2003.

RISK FACTORS

The  Company's  operating  results
are subject to quarterly  and annual  fluctuations  as a result of a number of factors.
Such factors include:

An economic downturn could result in
a decrease in the Company's sales and earnings.

The residential  furniture  industry
has  historically  been subject to cyclical  variations in the general economy and to
uncertainty  regarding future economic  prospects.  Economic downturns could affect
consumer spending habits by decreasing the overall  demand for home  furnishings.  Such
events would also impact  retailers,  the  Company's  primary  customers, resulting in a
decrease in sales and earnings.

Loss of market share due to
competition would result in a decrease in future sales and earnings.

The residential  furniture
 manufacturing  business is highly  competitive and fragmented.  The Company competes
with many other  manufacturers some of which offer widely advertised,  well known,
 branded products.  The highly competitive nature of the  industry  means the Company is
 constantly  subject to the risk of losing  market  share to those  privately  held
competitors who have lower sales and  profitability  targets.  As a result,  the

---



Company may not be able to maintain
or to raise the prices of its products in response to such  inflationary  pressures as
increasing  costs.  Also due to the large number of  competitors  and their  wide range
of product  offerings,  the  Company  may not be able to  differentiate  its products
(through styling, finish and other construction techniques) from those of its competitors.

Failure to  anticipate or respond to
changes in consumer  tastes and fashion  trends in a timely manner could result in a
decrease in future sales and earnings.

Residential  furniture is a highly
styled  product  subject to fashion  trends and geographic  consumer  tastes.  Consumer
tastes and fashion  trends can change  rapidly.  If the Company is unable to  anticipate
or respond to changes in consumer tastes and fashion  trends in a timely  manner it may
lose sales and be faced with excess  inventory  (both raw  materials and finished goods).
Disposal of excess inventory may result in a decrease in sales and earnings.

Failure to achieve  the  Company's
 projected  mix of product  sales could  result in a decrease in its future  sales and
earnings.

Some of the  Company's  products
 are sold for a higher  profit  than other of its  products.  An increase in the sales of
lower profit products at the expense of the sales of higher profit products could result
in a decrease in earnings.

Business failures of large customers
could result in a decrease in the Company's future sales and earnings.

Although the Company has no
customers who  individually  represent 10% or more of its total annual sales,  the
possibility of business  failures of large  customers  could result in a decrease in its
future sales and earnings in that these sales are difficult to replace.  For example,  in
2004 the bankruptcy filing of Breuner's  resulted in a charge to earnings of 9 cents per
diluted share.

Distribution  realignments  and cost
 savings  programs  can result in a decrease in the  Company's  near-term  sales and
earnings.

At times it is necessary for the
Company to discontinue certain  relationships with customers  (retailers) who do not meet
its growth and profitability standards.  Until realignment is established,  there can be
a decrease in near-term sales and earnings.  The Company  continually  reviews
 relationships  with its customers  (retailers) and future  realignments  are possible
based upon such ongoing reviews.

Manufacturing realignments could
result in a decrease in the Company's near-term earnings.

The Company  continually  reviews
its domestic  manufacturing  operations  and offshore  (import)  sourcing  capabilities.
Effects of  periodic  manufacturing  realignments  and cost  savings  programs  could
 result in a decrease  in  near-term earnings until the expected cost reductions are
achieved.  Such programs can include the  consolidation and integration of facilities,
 functions,  systems and  procedures.  Certain  products may also be shifted from
 domestic  manufacturing  to offshore  sourcing.  Such actions may not be  accomplished
 as quickly as anticipated and the expected cost reductions may not be achieved in full.

Increased  reliance on offshore
 (import)  sourcing of various products could adversely  affect the Company's  ability to
service customers which could result in a decrease in sales.

During the last several years, the
Company has been increasing its offshore (import)  capabilities to provide  flexibility
in product  programs and pricing to meet  competitive  pressures.  The mix of various
 product  lines has been moving from domestically  manufactured  to offshore  sourced.
 Offshore  (import)  sourcing  is subject to  political  instability  in countries  where
 contractors  and  suppliers are located and possible  delay due to managing at a
distance.  Either could make it more  difficult for the Company to service its customers.
 Other risks include the  imposition of regulations  and quotas relating to imports;
duties, taxes and other charges on imports; and,

---



significant  fluctuation of the
value of the U.S. dollar against foreign currencies, all of which could increase costs
and decrease earnings.

Fluctuations  in the price,
 availability  and  quality of raw  materials  could  cause  delay  which  could  result
in a decrease in the Company's sales and increase costs which would result in a decrease
in earnings.

Fluctuations  in the  price,
 availability  and  quality  of the raw  materials  that the  Company  uses in
 manufacturing residential  furniture  could have a negative  effect on its cost of sales
and  ability to meet the  demands of  customers (retailers).  Inability  to meet the
demands of  customers  could  result in the loss of future  sales.  The Company  uses
various  types of wood,  fabrics,  leathers,  glass,  upholstered  filling  material,
 steel,  and other raw  materials in manufacturing  furniture.  The costs to  manufacture
 furniture  depend in part on the market  prices of the raw materials used to produce the
 furniture.  The Company may not be able to pass along to its  customers all or a portion
of the costs of higher raw materials due to competitive and marketing  pressures.  For
example, in 2004 the price of steel increased by 88%.

A successful  product liability
claim brought against the Company in excess of available  insurance coverage would result
in a decrease in earnings  and any claim or product  recall that results in  significant
 adverse  publicity  against the Company may result in a decrease in sales and earnings.

The  Company  faces the  business
 risk of exposure  to product  liability  claims in the event that the use of any of its
products results in personal injury or property damage.  In the event that any of its
products prove to be defective,  the Company may be required to recall or redesign such
products.  The Company  maintains  insurance  against product liability claims,  but
there can be no assurance that such coverage will continue to be available on terms
 acceptable to it or that such coverage will be adequate for liabilities actually
incurred.

Future  acquisitions and investment
could result in dilution to earnings per share and a decrease in the valuation of the
Company's common stock.

As part of the Company's  business
 strategy,  it has made and expects to continue to make acquisitions and investments in
businesses that offer  complementary  products.  Risks commonly  encountered in
acquisitions  include the possibility that the Company pays more than the acquired
 company or assets are worth,  the difficulty of  assimilating  the operations and
personnel of the acquired  business,  the potential  disruption of our ongoing  business
and the distraction of management from ongoing business.  Consideration paid for future
 acquisitions could be in the form of cash or stock or a combination thereof.  Dilution
 to  existing  stockholders  and to earnings  per share may result in  connection  with
any such future acquisition.

Impairment of goodwill and other
intangible assets would result in a decrease in earnings.

Accounting rules require that
goodwill and other intangible  assets with indefinite  useful lives be tested for
impairment at least annually.  The Company has substantial  goodwill and other intangible
 assets which based upon the outcome of the annual test could result in the write-down of
all or a portion of these assets and a  corresponding  reduction in earnings and net
worth.

Certain  anti-takeover  provisions
and preferred stock could result in a decrease in a potential  acquirer's valuation of
the Company's common stock.

Certain  provisions  of the
 Company's  Certificate  of  Incorporation  could make it more  difficult for a third
party to acquire  control  of the  Company,  even if such  change  in  control  would be
 beneficial  to  stockholders.  Also,  the Certificate of  Incorporation  allows the
Company to issue preferred stock without  stockholder  approval.  Such issuances could
also make it more difficult for a third party to acquire the Company.

The Company's  growth strategy
 requires it to open a significant  number of new stores each year. If the Company and
its dealers are not able to open new stores or effectively  manage the growth of these
stores,  the Company's ability to grow and its profitability could be adversely affected.

---



The  Company's  growth in part
 depends on the  ability of the  Company  and its  dealers to open and  operate  new
stores successfully.  The Company and its dealers  opened a net total of 39 stores in
fiscal 2004.  In fiscal  2005,  the Company and its dealers  plan to open a total of 59
single brand  stores and  anticipates  further  store  openings in  subsequent years.
 The ability of the Company and its dealers to  identify  and open new stores in
 desirable  locations  and operate such new stores profitably is a factor in the
Company's ability to grow  successfully.  Increased demands on the Company's operational,
 managerial and  administrative  resources could cause the Company to operate its
business less  effectively, which in turn could cause deterioration of its profitability.

INTERNET ACCESS

Forms 10-K,  10-Q,  8-K and all
amendments to those reports are available  without  charge through the Companys
 Internet web site as soon as reasonably  practicable  after  electronically  filed with,
or furnished to, the Securities & Exchange Commission. The Companys website can be
accessed at www.furniturebrands.com.

ITEM 2.    
 Properties

The Company owns or leases the
following principal plants, offices and warehouses.

|Division/Location | Type of Facility           | Floor Space | Owned or Leased
|----------------- | -------------------------- | ----------- | ---------------
|                  |                            | (sq.ft.)    |                
|                  |                            |             |                
|Furniture Brands: |                            |             |                
|St. Louis, MO     | Headquarters               | 26,800      | Leased         
|                  |                            |             |                
|Broyhill:         |                            |             |                
|Lenoir, NC        | Headquarters               | 136,000     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 312,632     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 628,000     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 419,000     | Owned          
|Lenoir, NC        | Case goods plant/warehouse | 390,020     | Owned/Leased   
|Lenoir, NC        | Case goods plant/warehouse | 772,757     | Owned          
|Rutherfordton, NC | Upholstery plant/warehouse | 433,597     | Owned          
|Lenoir, NC        | Upholstery plant/warehouse | 252,380     | Owned          
|Taylorsville, NC  | Upholstery plant/warehouse | 212,754     | Owned          
|Rutherfordton, NC | Warehouse                  | 575,656     | Owned          
|Lenoir, NC        | Warehouse                  | 96,000      | Owned          
|Lenoir, NC        | Warehouse                  | 252,250     | Leased         
|Lenoir, NC        | Warehouse                  | 205,964     | Leased         
|Chino, CA         | Warehouse                  | 79,456      | Leased         
|                  |                            |             |                
|Drexel Heritage:  |                            |             |                
|Hildebran, NC     | Case goods plant           | 360,710     | Owned          
|Morganton, NC     | Upholstery plant           | 144,869     | Owned          
|High Point, NC    | Upholstery plant           | 280,650     | Owned          
|Morganton, NC     | Warehouse/offices          | 513,800     | Owned          
|High Point, NC    | Headquarters/showroom      | 100,000     | Owned          
|                  |                            |             |                
|Henredon:         |                            |             |                
|Morganton, NC     | Headquarters/              |             |                
|                  | casegoods plant/warehouse  | 898,690     | Owned          
|High Point, NC    | Upholstery plant           | 125,803     | Owned          
|Mt. Airy, NC      | Upholstery plant           | 102,500     | Owned          
|Hickory, NC       | Upholstery plant/warehouse | 519,011     | Owned          
|High Point, NC    | Upholstery plant/warehouse | 178,500     | Owned          
|Marion, NC        | Warehouse                  | 400,000     | Leased         

---



|Division/Location   | Type of Facility           | Floor Space | Owned or Leased
|------------------- | -------------------------- | ----------- | ---------------
|                    |                            | (sq.ft.)    |                
|                    |                            |             |                
|Lane:               |                            |             |                
|Tupelo, MS          | Headquarters/              |             |                
|                    | upholstery plant/warehouse | 715,951     | Owned          
|Saltillo, MS        | Upholstery plant/warehouse | 830,200     | Owned          
|Verona, MS          | Upholstery plant/warehouse | 423,392     | Owned          
|Pontotoc, MS        | Upholstery plant/warehouse | 358,652     | Owned          
|Wren, MS            | Warehouse                  | 494,813     | Leased         
|High Point, NC      | Plant                      | 187,162     | Owned          
|Conover, NC         | Upholstery plant           | 351,015     | Owned          
|Conover, NC         | Upholstery plant/warehouse | 347,500     | Owned          
|                    |                            |             |                
|Maitland-Smith:     |                            |             |                
|High Point, NC      | Headquarters/warehouse     | 220,000     | Leased         
|Cebu, Philippines   | Case goods plant           | 578,586     | Owned          
|Semarang, Indonesia | Plant/warehouse            | 145,199     | Leased         
|                    |                            |             |                
|Thomasville:       
|Thomasville, NC     | Headquarters/ Showroom     | 256,000     | Owned          
|Thomasville, NC     | Case goods plant/warehouse | 373,000     | Owned          
|Thomasville, NC     | Case goods plant           | 325,000     | Owned          
|Thomasville, NC     | Case goods plant           | 309,850     | Owned          
|Lenoir, NC          | Case goods plant/warehouse | 828,000     | Owned          
|Troutman, NC        | Upholstery plant           | 238,200     | Owned          
|Conover, NC         | Upholstery plant           | 123,200     | Owned          
|Hickory, NC         | Upholstery plant           | 58,700      | Owned          
|Hickory, NC         | Upholstery plant/warehouse | 209,800     | Leased         
|Thomasville, NC     | Warehouse                  | 731,000     | Owned          
|Appomattox, VA      | Case goods plant/warehouse | 829,800     | Owned          
|Carysbrook, VA      | Case goods plant           | 189,000     | Owned          
|Hickory, NC         | Case goods/upholstery      | 211,391     | Owned          
|                    | plant/warehouse            |             |                

The Tupelo, Mississippi facility is
encumbered by a mortgage and first lien securing revenue bonds. The Company believes its
properties are generally well maintained, suitable for its present operations and
adequate for current production requirements. Productive capacity and extent of
utilization of the Companys facilities are difficult to quantify with certainty
because in any one facility maximum capacity and utilization varies periodically
depending upon the product that is being manufactured, the degree of automation and the
utilization of the labor force in the facility. In this context, the Company estimates
that overall its production facilities were utilized during 2004 at a moderate level of
productive capacity and believes that in conjunction with its import capabilities the
Companys facilities have the capacity, if necessary, to expand production to meet
anticipated product requirements.

Item 3.    
Legal Proceedings

The Company is or may become a
defendant in a number of pending or threatened legal proceedings in the ordinary course
of business. In the opinion of management, the ultimate liability, if any, of the Company
from all such proceedings will not have a material adverse effect upon the consolidated
financial position or results of operations of the Company and its subsidiaries.

---



The Company is also subject to
regulation regarding environmental matters, and is a party to certain actions related
thereto. For information regarding environmental matters, see Item 1. Business
 Environmental Matters.

Item 4.    
 Submission of Matters to a Vote of Security Holders

Not applicable.

PART II

Item 5.    
Market for The Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities

(a)     Market
Information

| | Shares of
the Companys Common Stock are traded on the New York Stock Exchange. The reported
high and low sale prices for the Companys Common Stock on the New York Stock
Exchange are included in Note 13 to the consolidated financial statements of the Company.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Holders
| | -------

| | As
of February 28, 2005, there were approximately 1,700 holders of record of Common Stock.
| | ------------------------------------------------------------------------------------------

| | Dividends
| | ---------

| | The
Company began paying cash dividends on its Common Stock during the fourth quarter of
2003. The current rate is $0.15 per share per quarter. Additional information concerning
dividends may be found in the following sections of this Form 10-K, which are
incorporated herein by reference: Consolidated Statement of Cash Flows, Consolidated
Statement of Shareholders Equity and Comprehensive Income, and Note 13, Quarterly
Financial Information (Unaudited) in Item 8. Financial Statements and Supplementary
Data.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Equity Compensation
Plan Information
| | ------------------------------------

The following table sets forth
aggregate information regarding the Companys equity compensation plans as of
December 31, 2004:

|                     |                         |                      | Number of securities          
|-------------------- | ----------------------- | -------------------- | ------------------------------
|                     |                         |                      | remaining available for       
|                     | Number of securities to | Weighted-average     | future issuance under         
|                     | be issued upon exercise | exercise price of    | equity compensation plans     
|                     | of outstanding options, | outstanding options, | (excluding securitiesreflected
|Plan Category        | warrants and rights     | warrants and rights  | in column (1))                
|                     | (a)                     | (b)                  |                               
|Equity compensation  |                         |                      |                               
|plans approved by    |                         |                      |                               
|security holders (1) | 3,965,481               | $22.70               | 1,808,975                     
|                     |                         |                      |                               
|Equity compensation  |                         |                      |                               
|plans not approved   |                         |                      |                               
|by security holders  | --                      | --                   | --                            
|                     |                         |                      |                               
|Total                | 3,965,481               | $22.70               | 1,808,975                     

|(1) |  | Includes
the Companys 1992 Stock Option Plan and 1999 Long-Term Incentive Plan.  Included in
column (a) are 47,000 shares of restricted common stock that have been awarded
and that vest over a period from 3 to 5 years.  These shares of restricted common
stock were disregarded for purposes of computing the weighted-average exercise
price in column (b).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Annually,  the Board of Directors
determines the amount of fees to be paid to non-employee  Directors,  including an award
of restricted  shares of Company common stock, as described under  Compensation  of
Board of Directors in the 2005 Proxy Statement, hereby incorporated by reference.  These
shares are purchased in open-market transactions.

Annually,  Lane  Furniture
 Industries,  Inc., a subsidiary of the Company,  awards a limited  number of shares of
Company common  stock to a few of its truck  drivers as safety  awards.  345 shares of
the  Companys  common stock were issued as safety awards in 2004.  These shares are
purchased in open market transactions.

Information  regarding  the 1992
 Stock  Option  Plan and 1999  Long-Term  Incentive  Plan set forth in Note 7 of Notes to
Consolidated Financial Statements is hereby incorporated by reference.

(c)     Repurchase
Of Equity Securities

|              |           |            | Total Number of    | Approximate Dollar 
|------------- | --------- | ---------- | ------------------ | -------------------
|              | Total     |            | Shares Purchased   | Value of Shares    
|              | Number of | Average    | as Part of         | that May Yet Be    
|              | Shares    | Price Paid | Publicly Announced | Purchased Under the
|Period        | Purchased | per Share  | Plans or Programs  | Plans or Programs  
|              |           |            |                    |                    
|October 1-31  | 500,000   | $24.10     | 500,000            | $50,000,000        
|              |           |            |                    |                    
|November 1-30 | -         | -          | -                  | $50,000,000        
|              |           |            |                    |                    
|December 1-31 | -         | -          | -                  | $50,000,000        
|              |           |            |                    |                    
|Total         | 500,000   | $24.10     | 500,000            |                    

On
October 24, 2002, the Companys Board of Directors authorized a program to
repurchase $100 million of its Common Stock over a period of 24 months. This
authorization expired on October 24, 2004, at which time 3,431,600 shares had been
purchased at a total cost of $88,800,842.

On
July 27, 2004, the Companys Board of Directors authorized the repurchase of an
additional $50 million of its Common Stock over a period of 12 months. As of December 31,
2004 no shares have been purchased under this authorization.

---



Item 6.    
Selected Financial Data

FIVE-YEAR CONSOLIDATED
FINANCIAL REVIEW

|(Dollars in thousands              | Year Ended December 31,
|---------------------------------- | -----------------------
|except per share data)             | 2004                   
|                                   |                        
|Summary of operations:             |                        
|Net sales (1)                      | $2,447,430             
|Gross profit                       | 628,543                
|Interest expense                   | 15,314                 
|Earnings before income tax         |                        
|expense and extraordinary item     | 142,640                
|Income tax expense                 | 51,073                 
|Earnings before extraordinary item | 91,567                 
|Extraordinary item                 | -                      
|Net earnings                       | $     91,567           
|                                   |                        
|Per share of Common Stock          |                        
|- diluted:                         |                        
|Earnings before extraordinary item | $         1.66         
|Extraordinary item                 | -                      
|Net earnings                       | $         1.66         
|Dividends                          | $       0.525          
|                                   |                        
|Weighted average common shares     |                        
|- diluted (in thousands)           | 55,220                 
|                                   |                        
|Other information:                 |                        
|Working capital                    | $   711,115            
|Property, plant and equipment, net | 284,973                
|Capital expenditures               | 30,593                 
|Total assets                       | 1,587,759              
|Long-term debt                     | 302,400                
|Shareholders equity               | $   957,483            

On December 28, 2001, the Company
acquired through a wholly owned subsidiary  HDM Furniture Industries, Inc.  substantially
all of the assets and liabilities of Henredon Furniture Industries, Drexel Heritage
Furnishings and Maitland-Smith. Because the acquisition occurred prior to the last
business day of 2001, it was reflected in the Companys consolidated balance sheet
as of December 31, 2001; however, the Companys consolidated results of operations
for 2001 do not include any of the operations of the acquired companies.

|(1) |  | Amounts
reflect the reclassification of shipping revenues to net sales from cost of operations.
Reclassifications for the last five years were $72,155, $66,392, $61,127, $49,202 and
$43,811. These reclassifications had no impact on gross profit or net
earnings.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



Item 7.    
Managements Discussion and Analysis of Results of Operations and Financial Condition

MANAGEMENTS
DISCUSSION AND ANALYSIS OF RESULTS OFOPERATIONS AND FINANCIAL CONDITION

Overview

Furniture
Brands International, Inc. (the Company) is one of the largest home
(residential) furniture manufacturers in the United States. The Company markets its
products through four primary operating subsidiaries: Broyhill Furniture Industries,
Inc.; Lane Furniture Industries, Inc.; Thomasville Furniture Industries, Inc.; and HDM
Furniture Industries, Inc. The Company manufactures, sources (i.e., imports) and
distributes (i) case goods, consisting of bedroom, dining room and living room furniture,
(ii) stationary upholstery products, consisting of sofas, loveseats, sectionals and
chairs, (iii) occasional furniture, consisting of wood, metal and glass tables, accent
pieces, home entertainment centers and home office furniture, (iv) recliners, motion
furniture and sleep sofas, and (v) accessories.

The
Company primarily sells its products through diverse distribution channels consisting of
independent furniture dealers, national and local chain stores, department stores,
specialty stores and decorator showrooms. In recent years, the Company has focused its
distribution growth on single-branded, dedicated furniture centers, galleries and stores,
taking advantage of its strong brand names and breadth of product. The Company recently
announced its long-term strategy is to focus more heavily on single-branded stores, both
independently and Company-owned.

To
gain access to the premium price point segment of the home furniture market in the United
States, on December 28, 2001, the Company acquired substantially all of the assets and
liabilities of Henredon Furniture Industries, Drexel Heritage Furnishings and
Maitland-Smith (collectively HDM Furniture Industries, Inc.). The purchase price of the
acquisition was $287.6 million, consisting of $177.0 million in cash and 4.0 million
shares of the Companys common stock. The acquisition established the Company as the
residential furniture industrys only full-line resource in all middle and upper
price categories.

During
the past four years, the residential furniture manufacturers in the United States have
been negatively impacted by a structural shift to offshore sourcing (primarily to Asia,
but also to other countries with comparatively low labor costs) of various products particularly
case goods (wood furniture). As a result, domestic manufacturing capacity utilization has
been trending down, hurting the operating profitability of many companies in the
industry.

In
reaction to this change in sourcing activity, the Company has been implementing a plan to
reduce its domestic manufacturing capacity. This plan has included the closing of 23
manufacturing facilities since 2001. In 2004, the Company recorded pretax restructuring
and impairment charges of $9.2 million, consisting of $5.9 million charged to cost of
operations and $3.3 million charged to selling, general and administrative expenses. In
2003, pretax restructuring and impairment charges of $17.8 million were recorded,
consisting of $7.1 million charged to cost of operations and $10.7 million charged to
selling, general and administrative expenses. Pretax restructuring and impairment charges
of $26.4 million were recorded in 2001, consisting of $5.9 million charged to cost of
operations and $20.5 million charged to selling, general and administrative expenses.

To
take advantage of its strong brand names and overall breadth of product, the Company has
initiated a stores development program in order to gain better control and to accelerate
the growth rate of its retail distribution. This program will expand the number of stores
dedicated to selling exclusively the Companys brands. Currently, there are 229
dedicated stores, nine of which are owned by the Company, with a long-term goal of over
400 stores, many of which may be owned by the Company.

---



Results of Operations

As
an aid to understanding the Companys results of operations on a comparative basis,
the following table has been prepared to set forth certain statements of operations and
other data for 2004, 2003, and 2002.

|(Dollars in millions)         | Year Ended December 31,
|----------------------------- | -----------------------
|
|                              |                        
|                              |                        
|                              |                        
|                              |                        
|Net sales                     |                        
|Cost of operations            |                        
|Selling, general and          |                        
|administrative expenses       |                        
|Depreciation and amortization |                        
|Earnings from operations      |                        
|Interest expense              |                        
|Other income, net             |                        
|Earnings before income tax    |                        
|expense                       |                        
|Income tax expense            |                        
|Net earnings                  |                        
|Earnings per common share -   |                        
|diluted                       |                        
|Gross profit 1                |                        

|1 |  | The
Company believes that gross profit provides useful information regarding a companys
financial performance. Gross profit has been calculated by subtracting cost of operations
and the portion of depreciation associated with cost of goods sold from net sales.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (Dollars in millions)                             | Year Ended December 31,
| | ------------------------------------------------- | -----------------------
| |                                                   | 2004                   
| | Net sales                                         | $2,447.4               
| | Cost of operations                                | 1,781.0                
| | Depreciation (associated with cost of goods sold) | 37.9                   
| | Gross profit                                      | $   628.5              

Year Ended December 31, 2004
Compared to Year Ended December 31, 2003

Net
sales for 2004 were $2,447.4 million, essentially unchanged from $2,434.1 million
reported for 2003. 2004 was the fourth consecutive difficult year for the residential
furniture industry primarily due to weak consumer demand for furniture. The Company was
also negatively impacted by the bankruptcy of a major customer (Breuners) at mid-year
which resulted in the loss of over $40.0 million in annual sales volume.

Cost
of operations for 2004 was $1,781.0 million compared to $1,777.8 million in 2003. Cost of
operations as a percentage of net sales decreased from 73.0% for 2003 to 72.8% for 2004.
The decrease in cost of operations as a percentage of net sales was due to the increase
in imported product partially offset by a decrease in domestic capacity utilization and
increases in raw material prices.

---



Selling,
general and administrative expenses increased to $461.7 million in 2004 from $440.3
million in 2003. As a percentage of net sales, these expenses increased from 18.1% in
2003 to 18.9% in 2004. The increase was due to additional bad debt expense related to the
Breuners bankruptcy, increases in pension expense (due primarily to actuarial assumption
changes), advertising and professional fees, partially offset by reduced asset impairment
and restructuring charges.

Interest
expense for 2004 totaled $15.3 million compared to $19.4 million in 2003. The decrease in
interest expense reflects the Companys long-term debt reduction program and lower
interest rates.

Other
income, net for 2004 totaled $2.3 million compared to $3.5 million for 2003. For 2004,
other income consisted of interest on short-term investments and notes receivable of $1.1
million and other miscellaneous income and expense items totaling $1.2 million.

Income
tax expense for 2004 totaled $51.1 million, producing an effective tax rate of 35.8%
compared with an effective tax rate of 36.6% for 2003. The decrease in the effective tax
rate for 2004 was the result of increased research and development credits and reduced
state income taxes.

Earnings
per common share on a diluted basis were $1.66 and $1.68 for 2004 and 2003.
Weighted average shares used in the calculation of earnings per common share on a diluted
basis were 55,219,572 in 2004 and 56,255,788 in 2003, respectively. The reduction in
average shares was due to the impact of stock repurchases during 2004. No stock
repurchases occurred in 2003.

Gross
profit for 2004 was $628.5 million compared with $614.8 million for 2003, an increase of
2.2%. The increase in gross profit margin from 25.3% in 2003 to 25.7% in 2004 was
primarily due to an increase in imported product partially offset by a decrease in
domestic capacity utilization.

Year Ended December 31, 2003
Compared to Year Ended December 31, 2002

Net
sales for 2003 were $2,434.1 million compared to $2,458.8 million in 2002, a decrease of
$24.7 million or 1.0%. 2003 was the third consecutive difficult year for the residential
furniture industry primarily due to weak consumer demand for furniture  particularly
at the upper-end price points. However, positive comparisons were achieved during the
latter part of the year as consumers reacted favorably to better economic conditions and
financial markets.

Cost
of operations for 2003 was $1,777.8 million compared to $1,782.8 million in 2002. Cost of
operations as a percentage of net sales increased from 72.5% for 2002 to 73.0% for 2003.
The increase in cost of operations as a percentage of net sales was due to $7.1 million
of restructuring charges in 2003 as well as the residual effects of lowering domestic
manufacturing capacity to meet sourcing requirements.

Selling,
general and administrative expenses increased to $440.3 million in 2003 from $424.3
million in 2002. As a percentage of net sales, these expenses increased from 17.3% in
2002 to 18.1% in 2003. The increase was due to $10.7 million in asset impairment and
restructuring costs recorded in 2003. Other major expense increases included pensions
(due primarily to actuarial assumption changes) and advertising (to promote the Companys
various brands).

Interest
expense for 2003 totaled $19.4 million compared to $21.7 million in 2002. The decrease in
interest expense reflects the Companys long-term debt reduction program and lower
interest rates.

Other
income, net for 2003 totaled $3.5 million compared to $3.7 million for 2002. For 2003,
other income consisted of interest on short-term investments and notes receivable of $0.7
million and other miscellaneous income and expense items totaling $2.8 million.

Income
tax expense for 2003 totaled $54.6 million, producing an effective tax rate of 36.6%
compared with an effective tax rate of 35.6% for 2002. The increase in the effective tax
rate for 2003 was the result of reduced state income tax credits derived from certain
industrial revenue bonds, which the Company is repaying according to established
amortization schedules.

---



Earnings
per common share on a diluted basis were $1.68 and $2.11 for 2003 and 2002, respectively.
Weighted average shares used in the calculation of earnings per common share on a diluted
basis were 56,255,788 in 2003 and 56,386,827 in 2002, respectively. The reduction in
average shares was due to the impact of stock options using the treasury method of
calculation. No stock repurchases occurred in 2003 or 2002.

Gross
profit for 2003 was $614.8 million compared with $633.6 million for 2002, a decrease of
3.0%. The decrease in gross profit margin from 25.8% in 2002 to 25.3% in 2003 was
primarily due to asset impairment and restructuring costs previously discussed.

Financial Condition and Liquidity

Liquidity

Cash
and cash equivalents at December 31, 2004 totaled $51.2 million compared to $71.7 million
at December 31, 2003. For 2004, net cash provided by operating activities totaled $107.3
million. Net cash used by investing activities totaled $22.5 million. Net cash used by
financing activities totaled $105.3 million.

Working
capital was $711.1 million at December 31, 2004 compared to $703.2 million at December
31, 2003. The current ratio was 4.6-to-1 at December 31, 2004 compared to 4.8-to-1 at
December 31, 2003.

At
December 31, 2004, long-term debt totaled $302.4 million compared to $303.2 million at
December 31, 2003. The Companys debt-to-capitalization ratio was 24.0% at December
31, 2004 compared to 23.9% at December 31, 2003. The company has completed its
deleveraging program except for required amortization of certain industrial revenue
bonds.

Financing Arrangements

To
meet short-term capital and other financial requirements, the Company maintains a $550.0
million revolving credit facility with a group of financial institutions. The revolving
credit facility (which was refinanced on December 18, 2003) allows for the issuance of
letters of credit and cash borrowings. Letter of credit outstandings are limited to no
more than $150.0 million, with cash borrowings limited only by the facilitys
maximum availability less letters of credit outstanding. On December 31, 2004, there were
$300.0 million in cash borrowings and $19.0 million in letters of credit outstanding,
leaving an excess of $231.0 million available under the facility for future liquidity
needs.

Cash
borrowings under the revolving credit facility bear interest at a base rate or at an
adjusted Eurodollar rate plus an applicable margin which varies, depending upon the type
of loan the Company executes. The applicable margin over the base rate and Eurodollar
rate is subject to adjustment based upon achieving certain credit ratings. At December
31, 2004, loans outstanding under the revolving credit facility consisted of $300.0
million based on the adjusted Eurodollar rate which in conjunction with the interest rate
swaps described below, under Market Risk, have a weighted average interest
rate of 4.04%.

---



The
Company believes that its revolving credit facility, together with its historically
strong cash generation from operations, will be adequate to meet liquidity requirements
for the foreseeable future. These requirements would include normal, historical capital
expenditure levels as well as the Companys recently implemented cash dividend
program. The following table summarizes the cash payments related to the Companys
outstanding contractual obligations:

|                            |  | Less   |  |        |  |        |  | More     |  |        | 
|--------------------------- |  | ------ |  | ------ |  | ------ |  | -------- |  | ------ | 
|                            |  | than 1 |  | 1-3    |  | 4-5    |  | than 5   |  |        | 
|                            |  | year   |  | years  |  | years  |  | years    |  | Total  | 
|Long-term debt obligations  |  | $  0.8 |  | $  1.6 |  | $300.8 |  | $      - |  | $303.2 | 
|Operating lease obligations |  |        |  |        |  |        |  |          |  |        | 
|(net of subleases)          |  | 25.2   |  | 44 7   |  | 35.5   |  | 60.8     |  | 166.2  | 
|Purchase obligations (1)    |  | -      |  | -      |  | -      |  | -        |  | -      | 
|                            |  | $26.0  |  | $46.3  |  | $336.3 |  | $60.8    |  | $469.4 | 

(1)     The
 Company is not a party to any  long-term  supply  contracts  with  respect to the
 purchase of raw  materials  or finished goods.

Other

Market Risk

The
Company is exposed to market risk from changes in interest  rates.  The  Company's
 exposure to interest rate risk consists of its floating rate  revolving  credit
 facility.  This risk is managed using  interest rate swaps to fix a portion  of the
 Company's  floating  rate  long-term  debt.  Currently  interest  rate  swaps fix the
rate on the  entire outstanding  balance on the revolving  credit facility;  therefore,
 an increase in interest rates would have no impact on the Company's net earnings.

Funded Status of the Defined Benefit
Pension Plan

As
of December 31, 2004,  the  accumulated  benefit  obligation of the  Company's  defined
 benefit  pension plan exceeded the fair value of the plan's  assets.  As a result,  the
minimum  pension  liability  increased by $9.5  million. Total minimum pension  liability
at December 31, 2004 was $54.6 million,  $34.1 million,  net of tax. The after tax charge
is recorded as a component of other comprehensive income (expense).

Critical Accounting Policies

The
 preparation  of financial  statements in  conformity  with U.S.  generally  accepted
 accounting  principles requires  management to make estimates and  assumptions  that
affect the reported  amounts of assets and  liabilities  and disclosure of  contingent
 assets and  liabilities  at the date of the financial  statements  and the reported
 amounts of revenues  and  expenses  during the  reported  period.  Actual  results  are
likely to differ  from those  estimates,  but management believes such differences are
not significant.

Revenue
 Recognition-The  Company  recognizes  revenue (sales) when finished goods are shipped,
 with appropriate provisions for returns and  uncollectible  accounts.  Shipping
 revenues have  historically  been netted  against  related expenses.  We have
 reclassified  these  revenues  to net  sales,  increasing  net sales and cost of
 operations  by $72.1 million,  $66.4 million and $61.1 million in 2004, 2003, and 2002,
 respectively.  This  reclassification had no impact on earnings.

Allowance
for Doubtful  Accounts-The  Company  maintains an allowance for doubtful  accounts for
estimated losses resulting from the inability of the Company's  customers to make
required  payments.  The allowance for doubtful  accounts is based upon the review of
specific customer account balances and an overall aging of the accounts receivable.

Inventories-Inventories
 are  stated  at the lower of cost  (first-in,  first-out)  or  market.  Inventories  are
regularly  reviewed  for  obsolescence  and  appropriate  adjustments  recorded,  if
 necessary,  to insure their value is recoverable.

---



Long-lived
 Assets-Long-lived  assets,  which consist primarily of goodwill,  trademarks and
property,  plant and equipment,  are reviewed for impairment whenever events or changes
in business  circumstances indicate the carrying values of the assets may not be
 recoverable.  Impairment  losses are  recognized  if  expected  future cash flows of the
related assets are less than the carrying value.

Retirement
 Plans-The  Company uses various  assumptions to calculate  retirement plan expenses and
 obligations. These  assumptions  include the discount rate,  expected  return on plan
assets and rate of  compensation  increases.  The Company  believes  the  assumptions
 used are  reasonable;  however,  differences  in  actual  experience  or a change  in
assumptions  would impact the calculated  obligation and future expenses.  For example,
 a 25 basis point reduction in the discount rate would increase the accumulated  benefit
 obligation by $10.0 million and result in an additional charge (net of tax benefits) to
shareholders' equity of $6.2 million.

Recently Issued Statements of
Financial Accounting Standards

In
December  2004,  the Financial  Accounting  Standards  Board (FASB) issued  Statement of
Financial  Accounting Standards (SFAS) No. 123 (revised 2004),  Share-Based  Payment.
 This statement is a revision of SFAS No. 123,  Accounting for Stock-Based  Compensation
 and supersedes APB Opinion No. 25,  Accounting for Stock Issued to Employees.  SFAS No.
123 (revised  2004)  establishes  standards  for the  accounting  for  transactions  in
which an entity  exchanges  its equity instruments  for goods or  services.  The
 statement  is  effective  as of the  beginning  of the first  interim or annual
reporting  period that begins after June 15, 2005.  Although  management has not yet
determined the final impact that SFAS No. 123 (revised  2004) will have on the Company's
 financial  position and results of operations,  it is not  anticipated that the impact
will be materially  different than the effect  disclosed in Note 2 in the Notes to
Consolidated  Financial Statements.

In
November  2004, the FASB issued SFAS No. 151,  Inventory  Costs an amendment of
Accounting  Research  Bulletin (ARB) No. 43, Chapter 4. This statement  clarifies the
accounting for abnormal amounts of idle facility expense,  freight, handling  costs,  and
wasted  material  (spoilage)  by requiring  that they be recognized as  current-period
 charges.  In addition,  this  statement  requires  that  allocation  of fixed
 production  overhead to inventory be based on the normal capacity of the  production
 facilities.  We are currently  evaluating  the impact,  if any, that adoption of SFAS
No. 151 will have on the Company's financial position and results of operations.

In
 December  2003,  the FASB  issued a revised  FASB  Interpretation  No.  (FIN) 46,
 Consolidation  of Variable Interest  Entities.  FIN 46  clarifies  the  application  of
ARB No. 51,  Consolidated  Financial  Statements,  to certain entities in which equity
 investors do not have the  characteristics  of a controlling  financial  interest or do
not have sufficient equity at risk for the entity to finance its activities  without
 additional  subordinated  financial  support. The  statement is effective  for
 financial  statements  issued after  December 31, 2003.  The Company has not created any
variable  interest  entities and the adoption of FIN No. 46 will have no impact on the
 Company's  consolidated  financial statements.

Outlook

Sales
 expectations  for the first quarter  reflect the current  weakness in incoming orders
compared to a strong year-ago  period.  The Company  expects  first  quarter  sales to be
down in the  mid-single digits from last year's record  performance  and diluted
 net  earnings  per common  share to be at the lower end of the range given at the end of
January.

---



Forward-Looking Statements

The
Company  herein has made  forward-looking  statements  within the meaning of the "safe
harbor"  provisions of the Private  Securities  Litigation Reform Act of 1995. These
 forward-looking  statements  include the Company's expected sales,  earnings per share,
profit margins,  and cash flows, the effects of certain  manufacturing  realignments and
other business  strategies,  the prospects for the overall  business  environment,  and
other  statements  containing  the words "expects,"  "anticipates,"  "estimates,"
 "believes," and words of similar import. The Company cautions investors that any such
 forward-looking  statements  are not  guarantees  of future  performance  and that
certain  factors may cause actual results to differ materially from those in the
forward-looking  statements.  Such factors include, but are not limited to: changes in
economic  conditions;  loss of market share due to competition;  failure to anticipate or
respond to changes in consumer  tastes and  fashion  trends;  failure to achieve
 projected  mix of product  sales;  business  failures of large customers;  distribution
 and  manufacturing  realignments  and cost  savings  programs;  increased  reliance  on
offshore (import)  sourcing of various  products;  fluctuations  in the cost,
 availability  and quality of raw materials;  product liability  uncertainty;  impairment
 of goodwill  and other  intangible  assets and ability to open and operate new retail
stores  successfully.  Other risk factors may be listed from time to time in the
Company's  future public releases and SEC reports.

Item 7A.    
Quantitative and Qualitative Disclosures About Market Risk

The
Company is exposed to market risk from changes in interest  rates.  The  Company's
 exposure to interest rate risk  consists of its floating rate Secured  Credit
 agreement.  This risk is managed  using  interest rate swaps to fix a portion  of the
 Company's  floating  rate  long-term  debt.  Currently,  interest  rate  swaps fix the
rate on the entire outstanding  balance on the revolving  credit facility;  therefore,
 an increase in interest rates would have no impact on the Company's net earnings.

---



Item 8.         Financial Statements and Supplementary Data

CONSOLIDATED BALANCE
SHEETS

|(Dollars in thousands)                                            |  |  |   | December 31, |   |   | December 31, |  
|----------------------------------------------------------------- |  |  | - | ------------ | - | - | ------------ | -
|                                                                  |  |  |   | 2004         |   |   | 2003         |  
|Assets                                                            |  |  |   |              |   |   |              |  
|Current assets:                                                   |  |  |   |              |   |   |              |  
|Cash and cash equivalents                                         |  |  | $ | 51,248       |   | $ | 71,668       |  
|Receivables, less allowances of $20,919                           |  |  |   |              |   |   |              |  
|($19,378 at December 31, 2003)                                    |  |  |   | 374,733      |   |   | 366,448      |  
|Inventories (Note 4)                                              |  |  |   | 444,828      |   |   | 414,684      |  
|Deferred income taxes                                             |  |  |   | 28,044       |   |   | 25,563       |  
|Prepaid expenses and other current assets                         |  |  |   | 9,272        |   |   | 7,689        |  
|Total current assets                                              |  |  |   | 908,125      |   |   | 886,052      |  
|Property, plant and equipment:                                    |  |  |   |              |   |   |              |  
|Land                                                              |  |  |   | 20,711       |   |   | 21,742       |  
|Buildings and improvements                                        |  |  |   | 258,493      |   |   | 251,814      |  
|Machinery and equipment                                           |  |  |   | 403,392      |   |   | 400,375      |  
|                                                                  |  |  |   | 682,596      |   |   | 673,931      |  
|Less accumulated depreciation                                     |  |  |   | 397,623      |   |   | 363,368      |  
|Net property, plant and equipment                                 |  |  |   | 284,973      |   |   | 310,563      |  
|Goodwill (Note 5)                                                 |  |  |   | 183,097      |   |   | 183,789      |  
|Other intangible assets (Note 5)                                  |  |  |   | 169,671      |   |   | 169,671      |  
|Other assets                                                      |  |  |   | 41,893       |   |   | 28,184       |  
|                                                                  |  |  | $ | 1,587,759    |   | $ | 1,578,259    |  
|Liabilities and Shareholders' Equity                              |  |  |   |              |   |   |              |  
|Current liabilities:                                              |  |  |   |              |   |   |              |  
|Accounts payable                                                  |  |  | $ | 85,363       |   | $ | 83,584       |  
|Accrued employee compensation                                     |  |  |   | 28,521       |   |   | 29,317       |  
|Other accrued expenses                                            |  |  |   | 83,126       |   |   | 69,918       |  
|Total current liabilities                                         |  |  |   | 197,010      |   |   | 182,819      |  
|Long-term debt (Note 6)                                           |  |  |   | 302,400      |   |   | 303,200      |  
|Deferred income taxes                                             |  |  |   | 78,305       |   |   | 69,796       |  
|Other long-term liabilities                                       |  |  |   | 52,561       |   |   | 55,542       |  
|                                                                  |  |  |   |              |   |   |              |  
|Shareholders' equity:                                             |  |  |   |              |   |   |              |  
|Preferred stock, authorized 10,000,000 shares,                    |  |  |   |              |   |   |              |  
|no par value - issued, none                                       |  |  |   | -            |   |   | -            |  
|Common stock, authorized 200,000,000 shares, $1.00 stated value - |  |  |   |              |   |   |              |  
|issued 56,482,541 shares at December 31, 2004 and 56,277,066      |  |  |   |              |   |   |              |  
|shares at December 31, 2003 (Note 7)                              |  |  |   | 56,483       |   |   | 56,277       |  
|Paid-in capital                                                   |  |  |   | 226,602      |   |   | 221,388      |  
|Retained earnings                                                 |  |  |   | 789,856      |   |   | 726,932      |  
|Accumulated other comprehensive income (expense) (Note 10)        |  |  |   | (31,076      | ) |   | (31,446      | )
|Treasury stock at cost (3,266,456 shares at                       |  |  |   |              |   |   |              |  
|December 31, 2004 and 330,409 shares at December 31, 2003)        |  |  |   | (84,382      | ) |   | (6,249       | )
|Total shareholders' equity                                        |  |  |   | 957,483      |   |   | 966,902      |  
|                                                                  |  |  | $ | 1,587,759    |   | $ | 1,578,259    |  

See accompanying notes to
consolidated financial statements.

---



CONSOLIDATED STATEMENTS
OF OPERATIONS

|(Dollars in thousands except per share data) | Year Ended December 31,
|-------------------------------------------- | -----------------------
|
|                                             |                        
|Net sales                                    |                        
|                                             |                        
|Costs and expenses:                          |                        
|Cost of operations                           |                        
|                                             |                        
|Selling, general and administrative expenses |                        
|                                             |                        
|Depreciation and amortization                |                        
|                                             |                        
|Earnings from operations                     |                        
|                                             |                        
|Interest expense                             |                        
|                                             |                        
|Other income, net                            |                        
|                                             |                        
|Earnings before income tax expense           |                        
|                                             |                        
|Income tax expense (Note 8)                  |                        
|                                             |                        
|Net earnings                                 |                        
|                                             |                        
|Earnings per common share - basic (Note 7)   |                        
|Earnings per common share - diluted (Note 7) |                        

See accompanying notes to
consolidated financial statements.

---



CONSOLIDATED STATEMENTS
OF CASH FLOWS

|(Dollars in thousands)                               | Year Ended December 31,
|---------------------------------------------------- | -----------------------
|
|Cash flows from operating activities:                |                        
|Net earnings                                         |                        
|Adjustments to reconcile net earnings                |                        
|to net cash provided by operating activities:        |                        
|Depreciation and amortization                        |                        
|Other, net                                           |                        
|(Increase) decrease in receivables                   |                        
|(Increase) decrease in inventories                   |                        
|(Increase) decrease in prepaid expenses and          |                        
|intangible and other assets                          |                        
|Increase (decrease) in accounts payable,             |                        
|accrued interest expense and other accrued expenses  |                        
|Increase in net deferred tax liabilities             |                        
|Increase (decrease) in other long-term liabilities   |                        
|Net cash provided by operating activities            |                        
|                                                     |                        
|Cash flows from investing activities:                |                        
|Proceeds from the disposal of assets                 |                        
|Additions to property, plant and equipment           |                        
|Net cash used by investing activities                |                        
|                                                     |                        
|Cash flows from financing activities:                |                        
|Payments for debt issuance costs                     |                        
|Additions to long-term debt                          |                        
|Payments of long-term debt                           |                        
|Proceeds from issuance of common stock               |                        
|Payments of cash dividends                           |                        
|Proceeds from the issuance of treasury stock         |                        
|Payments for the purchase of treasury stock          |                        
|Net cash used by financing activities                |                        
|                                                     |                        
|Net increase (decrease) in cash and cash equivalents |                        
|Cash and cash equivalents at beginning of period     |                        
|Cash and cash equivalents at end of period           |                        
|                                                     |                        
|Supplemental Disclosure:                             |                        
|Cash payments for income taxes, net                  |                        
|Cash payments for interest expense                   |                        

See accompanying notes to
consolidated financial statements.

---



CONSOLIDATED STATEMENTS
OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME

|(Dollars in thousands)                                      | Year Ended December 31,
|----------------------------------------------------------- | -----------------------
|
|Common Stock:                                               |                        
|Beginning balance                                           |                        
|Stock plans activity (Note 7)                               |                        
|Ending balance                                              |                        
|Paid-In Capital:                                            |                        
|Beginning balance                                           |                        
|Stock plans activity (Note 7)                               |                        
|Ending balance                                              |                        
|Retained Earnings:                                          |                        
|Beginning balance                                           |                        
|Net earnings                                                |                        
|Cash dividends (per share: 2004 - $0.525, 2003 - $0.125)    |                        
|Ending balance                                              |                        
|Accumulated Other Comprehensive Income (Expense): (Note 10) |                        
|Beginning balance                                           |                        
|Other comprehensive income (expense)                        |                        
|Ending balance                                              |                        
|Treasury Stock:                                             |                        
|Beginning balance                                           |                        
|Stock plans activity (Note 7)                               |                        
|Purchase of treasury stock (3,431,600 shares)               |                        
|Ending balance                                              |                        
|Total Shareholders' Equity                                  |                        
|Comprehensive Income (Expense):                             |                        
|Net earnings                                                |                        
|Other comprehensive income, net of tax:                     |                        
|Financial instruments accounted for as hedges               |                        
|Minimum pension liability                                   |                        
|Foreign currency translation                                |                        
|Other comprehensive income (expense)                        |                        
|                                                            |                        

See accompanying notes to
consolidated financial statements.

---



NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

(Dollars in thousands except
per share data)

1.     The
Company

Furniture
Brands International, Inc. (referred to herein as the Company) is one of the
largest home furniture manufacturers in the United States. During all of the years
covered in these financial statements, the Company had four primary operating
subsidiaries: Broyhill Furniture Industries, Inc.; Lane Furniture Industries, Inc.;
Thomasville Furniture Industries, Inc. and HDM Furniture Industries, Inc.

Substantially
all of the Companys sales are made to unaffiliated furniture retailers. The Company
has a diversified customer base with no one customer accounting for 10% or more of
consolidated net sales and no particular concentration of credit risk in one economic
sector. Foreign operations and net sales are not material.

2.     Significant
Accounting Policies

The
significant accounting policies of the Company are set forth below.

Use of Estimates

The
preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of sales and expenses
during the reported period. Actual results are likely to differ from those estimates, but
management believes such differences are not significant.

Principles of Consolidation

The
consolidated financial statements include the accounts of the Company and all of its
subsidiaries. All material intercompany transactions are eliminated in consolidation. The
Companys fiscal year ends on December 31. The operating companies included in the
consolidated financial statements report their results of operations as of the Saturday
closest to December 31. Accordingly, the results of operations will periodically include
a 53-week fiscal year. Fiscal years 2004 and 2002 were 52-week years and fiscal year 2003
was a 53-week year.

Cash and Cash Equivalents

The
Company considers all short-term investments with an original maturity of three months or
less to be cash equivalents.

Inventories

Inventories
are stated at the lower of cost (first-in, first-out) or market. Inventories are
regularly reviewed for obsolescence and appropriate adjustments recorded, if necessary,
to insure their value is recoverable.

Property, Plant and Equipment

Property,
plant and equipment are recorded at cost when acquired. Depreciation is calculated using
both accelerated and straight-line methods based on the estimated useful lives of the
respective assets, which generally range from 3 to 45 years for buildings and
improvements and from 3 to 12 years for machinery and equipment. Long-lived assets are
reviewed for impairment whenever events or changes in business circumstances indicate the carrying
value of the assets may not be recoverable. Impairment losses are recognized if expected
future cash flows of the related assets are less than their carrying value.

---



Intangible Assets

Intangible
assets consist of goodwill and trademarks. Effective with the Companys adoption of
Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other
Intangible Assets, on January 1, 2002, goodwill and intangible assets with
indefinite lives are no longer amortized, but instead tested for impairment. Prior to
adoption of SFAS No. 142, goodwill and trademarks were amortized on a straight-line basis
over 20 to 40-year periods. Intangible assets are reviewed for impairment annually or
whenever events or changes in business circumstances indicate the carrying value of the
assets may not be recoverable. Impairment losses are recognized if future cash flows of
the related assets are less than their carrying values.

Fair Value of Financial Instruments

The
Company considers the carrying amounts of cash and cash equivalents, receivables, and
accounts payable to approximate fair value because of the short maturity of these
financial instruments.

Amounts
outstanding under long-term debt agreements are considered to be carried on the financial
statements at their estimated fair values because they accrue interest at rates which
generally fluctuate with interest rate trends.

The
Company periodically uses interest rate swap agreements (derivative financial
instruments) to hedge risk associated with its floating rate long-term debt. Under SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities, each derivative
instrument is recorded on the balance sheet as an asset or liability with any gain or
loss recorded as a component of accumulated other comprehensive income (expense) until
recognized in earnings. The fair value of the swap agreements is based upon quoted market
prices. The net amount to be paid or received under the interest rate swap agreements is
recorded as a component of interest expense. The fair value of the interest rate swap
agreements is included in other assets as of December 31, 2004 and other long-term
liabilities as of December 31, 2003.

Revenue Recognition

The
Company recognizes sales when finished goods are shipped, with appropriate provisions for
returns and uncollectible accounts. Shipping revenues have historically been netted
against related expenses. We have reclassified these revenues to net sales, increasing
net sales and cost of operations by $72,155, $66,392 and $61,127 in 2004, 2003 and 2002,
respectively. This reclassification had no impact on earnings.

Advertising Costs

Advertising
production costs are expensed when advertisements are first aired or distributed. Total
advertising costs for 2004, 2003 and 2002 were $82,089, $77,124 and $72,243,
respectively.

Income Taxes

Deferred
tax assets and liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates in effect for the year in which those
temporary differences are expected to be recovered or settled. The effect of a change in
tax rates on deferred tax assets and liabilities is recognized as income tax expense
(benefit) in the period that includes the enactment date.

---



Stock-Based Compensation

The
Company accounts for stock-based compensation using the intrinsic value method as
prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees. Had compensation cost for the Companys stock-based compensation plan
been determined consistent with SFAS No. 123, Accounting for Stock-Based Compensation,
the Companys net earnings and net earnings per share would have been as follows:

|                                          | Year Ended December 31,
|----------------------------------------- | -----------------------
|
|Net Earnings:                             |                        
|As reported                               |                        
|Deduct: Stock based employee compensation |                        
|expense determined under fair value       |                        
|based method, net of income tax benefits  |                        
|Pro forma                                 |                        
|                                          |                        
|Earnings per share - basic:               |                        
|As reported                               |                        
|Pro forma                                 |                        
|                                          |                        
|Earnings per share - diluted:             |                        
|As reported                               |                        
|Pro forma                                 |                        

The
weighted average fair value of options granted is estimated as of the date of grant using
the Black-Scholes option pricing model with the following weighted average assumptions:

|                        |  | 2004 |   | 2003 |   | 2002 |  
|----------------------- |  | ---- | - | ---- | - | ---- | -
|Risk free interest rate |  | 3.2  | % | 3.0  | % | 4.3  | %
|Expected dividend yield |  | 1.7  | % | 0.0  | % | 0.0  | %
|Expected life (years)   |  | 6.0  |   | 6.0  |   | 6.0  |  
|Expected volatility     |  | 50.8 | % | 50.0 | % | 49.0 | %

In
December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123
(revised 2004), Share-Based Payment. This statement is a revision of SFAS No. 123, and
supersedes APB Opinion No. 25. SFAS No. 123 (revised 2004) establishes standards for the
accounting for transactions in which an entity exchanges its equity instruments for goods
or services. The statement is effective as of the beginning of the first interim or
annual reporting period that begins after June 15, 2005. Although management has not yet
determined the final impact that SFAS No. 123 (revised 2004) will have on the Companys
financial position and results of operations, it is not anticipated that the annual
impact will be materially different than the pro forma disclosure above.

Reclassification

Certain
prior year amounts have been reclassified to conform to the current year presentation.

3.     Restructuring
and Asset Impairment Charges

In
2001 the Company began implementing a plan to reduce its domestic manufacturing capacity.
As of December 31, 2004, this plan has included the closing of 23 manufacturing
facilities. Restructuring activity included the closing of three manufacturing facilities
in 2004 and the closing of three manufacturing facilities and the realignment of two
additional facilities in 2003. Also included in both years were asset impairment

---



charges related to the write-down of
previously closed facilities in order to accelerate their disposal. Asset impairment
charges were recorded to reduce the carrying value of all idle facilities and related
machinery and equipment to their net realizable value. The determination of the
impairment charges were based primarily upon (i) consultations with real estate brokers
retained to assist the Company in disposal efforts and (ii) proceeds from recent sales of
Company facilities and the market prices being obtained for similar long-lived assets.

Restructuring
and asset impairment charges were as follows:

|                                                 | Year Ended December 31,
|------------------------------------------------ | -----------------------
|
|Restructuring charges:                           |                        
|Costs to shutdown, cleanup and vacate facilities |                        
|One-time termination benefits                    |                        
|Inventory write-downs                            |                        
|                                                 |                        
|Impairment charges                               |                        
|                                                 |                        
|Cost of operations                               |                        
|Selling, general and administrative expenses     |                        
|                                                 |                        

Real
estate with a carrying value of $3,301 and $7,223 was included in other assets as of
December 31, 2004 and 2003, respectively. There were no restructuring charges included in
other accrued expenses at December 31, 2004 and 2003.

4.     Inventories

Inventories
are summarized as follows:

|                  |  |  |   | December 31, |  |   | December 31, | 
|----------------- |  |  | - | ------------ |  | - | ------------ | 
|                  |  |  |   | 2004         |  |   | 2003         | 
|Finished products |  |  | $ | 268,170      |  | $ | 252,582      | 
|Work-in-process   |  |  |   | 49,362       |  |   | 52,513       | 
|Raw materials     |  |  |   | 127,296      |  |   | 109,589      | 
|                  |  |  | $ | 444,828      |  | $ | 414,684      | 

---



5.     Goodwill
and Other Intangible Assets

Goodwill
and other intangible assets include the following:

|                               | December 31, | December 31, | 
|------------------------------ | ------------ | ------------ | 
|                               | 2004         | 2003         | 
|Goodwill                       | $265,835     | $266,527     | 
|Less: accumulated amortization | 82,738       | 82,738       | 
|Goodwill                       | $183,097     | $183,789     | 
|                               |              |              | 
|Trademarks and trade names     | $206,179     | $206,179     | 
|Less: accumulated amortization | 36,508       | 36,508       | 
|Other intangible assets        | $169,671     | $169,671     | 

On
January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 requires that goodwill and other intangible assets with
indefinite lives no longer be amortized, but instead be tested annually for
impairment or whenever events or changes in business circumstances indicate the carrying
value of the assets may not be recoverable. No impairment was recorded in 2004 or 2003.
The Companys other intangible assets consist of trademarks and trade names all
having indefinite lives.

6.     Long-Term
Debt

Long-term
debt consists of the following:

|                                      | December 31, | December 31,
|------------------------------------- | ------------ | ------------
|                                      | 2004         | 2003        
|Revolving credit facility (unsecured) | $300,000     | $300,000    
|Other                                 | 2,400        | 3,200       
|                                      | $302,400     | $303,200    

The
following discussion summarizes certain provisions of the long-term debt.

Revolving Credit Facility

On
December 18, 2003, the Company refinanced its revolving credit facility with a group of
financial institutions. The new facility is an unsecured revolving credit facility with a
commitment of $550,000 and a maturity date of June 7, 2008. The facility allows for
issuance of letters of credit and cash borrowings. Letters of credit outstanding are
limited to no more than $150,000, with cash borrowings limited only by the facilitys
maximum availability less letters of credit outstanding.

Currently,
for letter of credit issuances, a fee of 1.00% per annum (subject to increase/decrease
based upon the Company achieving certain credit ratings from Standard & Poors
and Moodys) is assessed for the account of the lenders ratably. A further fee of
0.125% is assessed on standby letters of credit representing a facing fee. A customary
administrative charge for processing letters of credit is also payable to the relevant
issuing bank. Letter of credit fees are payable quarterly in arrears.

---



Cash
borrowings under the revolving credit facility bear interest at a base rate or at an
adjusted Eurodollar rate plus an applicable margin which varies, depending upon the type
of loan the Company executes. The applicable margin over the base rate and adjusted
Eurodollar rate is subject to adjustment based upon achieving certain credit ratings. At
December 31, 2004, loans outstanding under the revolving credit facility consisted of
$300,000 based on the adjusted Eurodollar rate, which in conjunction with the interest
rate swaps have a weighted average interest rate of 4.04%.

At
December 31, 2004, there were $300,000 of cash borrowings and $19,018 in letters of
credit outstanding under the revolving credit facility, leaving an excess of $230,982
available for future liquidity needs.

The
revolving credit facility has no mandatory principal payments; however, the commitment
matures on June 7, 2008. The facility requires the Company to meet certain financial
covenants including a minimum consolidated net worth ($875,000 as of December 31, 2004
and $900,000 thereafter) and maximum leverage ratio (ratio of consolidated debt to
consolidated EBITDA (as defined in the credit agreement) of 2.75 to 1). In addition, the
facility requires repayment upon the occurrence of a change of control of the Company. As
of December 31, 2004, the Company was in compliance with all financial covenants.

Other

Other
long-term debt consists of industrial revenue bonds with an interest rate of 7.0%.

Interest Rate Swap Agreements

In
May 2004, in order to reduce the impact of changes in interest rates on its floating rate
long-term debt, the Company entered into three interest rate swap agreements each having
a notional amount of $100,000 and a termination date in May 2007.
The Company pays the counterparties a fixed rate of 2.55% per annum and receives payment
based upon the floating three-month LIBOR rate.

7.     Common
Stock

The
Companys restated certificate of incorporation includes authorization to issue up
to 200 million shares of Common Stock with a $1.00 per share stated value. As of December
31, 2004, 56,482,541 shares of Common Stock were issued.

The
Company has been authorized by its Board of Directors to repurchase its Common Stock from
time to time in open market or privately negotiated transactions. Common Stock
repurchases are recorded as treasury stock and may be used for general corporate
purposes. As of December 31, 2004, the Company has Board of Directors authorization
for the repurchase of an additional $50,000 of its Common Stock.

Shares
of Common Stock were reserved for the following purposes at December 31, 2004:

|                      | Number of Shares
|--------------------- | ----------------
|Common stock options: |                 
|Granted               | 3,918,481       
|Available for grant   | 1,808,975       
|                      | 5,727,456       

The
Company has outstanding option grants pursuant to the 1992 Stock Option Plan and the 1999
Long-Term Incentive Plan. These plans are administered by the Executive Compensation and
Stock Option Committee of the Board of Directors and permit certain key employees to be
granted nonqualified options, performance-based options, restricted stock, or
combinations thereof. Options must be issued at market value on the date of grant and
expire in a maximum of ten years.

The
Company issued 9,000 and 4,000 shares of restricted stock in 2004 and 2003, respectively.
The restricted shares vest over various periods from three to five years. The deferred
compensation cost is amortized to expense over the period of time the restrictions are in
place and the unamortized portion is classified as a reduction of paid-in-capital in the
Companys consolidated balance sheets.

---



Changes
in options granted and outstanding are summarized as follows:

|                         |  | Year Ended December 31,
|------------------------ |  | -----------------------
|
|                         |  |                        
|                         |  |                        
|Beginning of period      |  |                        
|Granted                  |  |                        
|Exercised                |  |                        
|Cancelled                |  |                        
|End of period            |  |                        
|Exercisable at           |  |                        
|end of period            |  |                        
|Weighted average fair    |  |                        
|value of options granted |  |                        

Summarized
information regarding stock options outstanding and exercisable at December 31, 2004
follows:

|          | Outstanding | Exercisable
|--------- | ----------- | -----------
|Range of  |             |            
|Exercise  |             |            
|Prices    |             |            
|Up to $10 |             |            
|$10 - $20 |             |            
|$20 - $30 |             |            
|Over $30  |             |            
|          |             |            

Weighted
average shares used in the computation of basic and diluted earnings per common share for
2004, 2003, and 2002 are as follows:

|                                  | Year Ended December 31,
|--------------------------------- | -----------------------
|                                  | 2004                   
|Weighted average shares used for  |                        
|basic earnings per common share   | 54,653,995             
|Effect of dilutive securities:    |                        
|Stock options                     | 565,577                
|Weighted average shares used for  |                        
|diluted earnings per common share | 55,219,572             

---



Excluded
from the computation of diluted earnings per common share were options to purchase
948,449 and 432,600 shares at an average price of $31.72 and $33.94 per share during 2004
and 2003, respectively. These options have been excluded from the diluted earnings per
share calculation because their inclusion would be antidilutive.

8.     Income
Taxes

Income
tax expense is comprised of the following:

|                | Year Ended December 31,
|--------------- | -----------------------
|                |                        
|Current:        |                        
|Federal         |                        
|State and local |                        
|Foreign         |                        
|                |                        
|Deferred        |                        
|                |                        

The
following table reconciles the differences between the federal corporate statutory rate
and the Companys effective income tax rate:

|                                     | Year Ended December 31,
|------------------------------------ | -----------------------
|                                     |                        
|Federal corporate statutory rate     |                        
|State and local income taxes, net of |                        
|federal tax benefit                  |                        
|Other                                |                        
|Effective income tax rate            |                        

---



The
sources of the tax effects for temporary differences that give rise to the deferred tax
assets and liabilities were as follows:

|                                          | December 31, | December 31,
|----------------------------------------- | ------------ | ------------
|                                          | 2004         | 2003        
|Deferred tax assets attributable to:      |              |             
|Expense accruals                          | $   15,994   | $ 17,271    
|Valuation allowances                      | 15,172       | 16,605      
|Asset impairment charges                  | 2,872        | 4,435       
|Employee pension and other benefit plans  | 14,207       | 11,209      
|Other                                     | 1,622        | 1,457       
|Total deferred tax assets                 | 49,867       | 50,977      
|Deferred tax liabilities attributable to: |              |             
|Fair value adjustments                    | (43,239)     | (43,938)    
|Other intangible assets                   | (28,973)     | (26,714)    
|Depreciation                              | (15,840)     | (12,751)    
|Inventory costs capitalized               | (2,253)      | (2,170)     
|Other                                     | (9,823)      | (9,637)     
|Total deferred tax liabilities            | (100,128)    | (95,210)    
|Net deferred tax liabilities              | $(50,261)    | $(44,233)   

9.     Employee Benefits

The Company sponsors or contributes to retirement plans covering substantially all employees.
The total cost of all plans for 2004, 2003, and 2002 was $16,947, $10,678, and $7,075, respectively.

Company-Sponsored Defined Benefit Plans

Employees are covered primarily by noncontributory plans, funded by Company contributions to trust
funds, which are held for the sole benefit of employees. Cash contributions to the trust funds during 2004 and 2003 were $15,000 and $10,000, respectively. The Company does not
expect to make an additional cash contribution during 2005. Monthly retirement benefits are based upon service and pay with employees becoming vested upon completion of five
years of service. Annual plan benefit payments to retirees and/or beneficiaries are expected to average $24,000 for the next ten years.

The investment objective of the trust funds is to ensure, over the long-term life of the
trusts, an adequate asset balance to support the benefit obligations to participants, retirees and beneficiaries. In meeting this objective, the Company seeks to achieve
investment returns at or above selected benchmarks consistent with a prudent level of diversification. The Company retains registered investment advisors to manage specific
asset classes. Investment advisors are selected from established and financially sound organizations with proven records in managing funds in the appropriate asset class.
Investment advisors are given strict investment guidelines and performance benchmarks.

Annual cost for defined benefit plans is determined using the projected unit credit actuarial
method. Prior service cost is amortized on a straight-line basis over the average remaining service period of employees expected to receive benefits.

---



It is the Companys practice to fund pension costs to the extent that such costs are
tax deductible and in accordance with ERISA. The assets of the various plans include corporate equities, government securities, corporate debt securities and insurance
contracts. The table below summarizes the funded status of the Company-sponsored defined benefit plans.

|                                                 |  |  |   | December 31, |   |   | December 31, |  
|------------------------------------------------ |  |  | - | ------------ | - | - | ------------ | -
|                                                 |  |  |   | 2004         |   |   | 2003         |  
|Change in projected benefit obligation:          |  | 
|Projected benefit obligation - beginning of year |  |  | $ | 385,853      |   | $ | 349,284      |  
|Service cost                                     |  |  |   | 12,411       |   |   | 11,521       |  
|Interest cost                                    |  |  |   | 24,429       |   |   | 23,795       |  
|Plan amendments                                  |  |  |   | 1,377        |   |   | 184          |  
|Actuarial loss                                   |  |  |   | 14,833       |   |   | 20,300       |  
|Benefits paid                                    |  |  |   | (20,589      | ) |   | (19,231      | )
|Projected benefit obligation - end of year       |  |  | $ | 418,314      |   | $ | 385,853      |  
|                                                 |  | 
|Change in plan assets:                           |  |  |   |              |   |   |              |  
|Fair value of plan assets - beginning of year    |  |  | $ | 327,643      |   | $ | 292,149      |  
|Actual return on plan assets                     |  |  |   | 25,119       |   |   | 43,443       |  
|Employer contributions                           |  |  |   | 16,276       |   |   | 11,282       |  
|Benefits paid                                    |  |  |   | (20,589      | ) |   | (19,231      | )
|Fair value of plan assets - end of year          |  |  | $ | 348,449      |   | $ | 327,643      |  
|                                                 |  | 
|Funded status                                    |  |  | $ | (69,865      | ) | $ | (58,210      | )
|Fair value adjustment                            |  |  |   | (11,309      | ) |   | (12,800      | )
|Recognition of minimum liability                 |  |  |   | (54,634      | ) |   | (45,145      | )
|Unrecognized net actuarial loss                  |  |  |   | 97,859       |   |   | 84,503       |  
|Unrecognized prior service cost                  |  |  |   | 2,127        |   |   | 1,094        |  
|Accrued pension cost                             |  |  | $ | (35,822      | ) | $ | (30,558      | )
|                                                 |  | 
|Accumulated benefit obligation                   |  |  | $ | 386,603      |   | $ | 356,421      |  

The fair value adjustment relates to the Companys 1992 reorganization.

The asset allocations for the Companys defined benefit plans are as follows:

|                  | Percentage of Plan Assets
|----------------- | -------------------------
|
|                  |                          
|Equity securities |                          
|Debt securities   |                          
|                  |                          

---



Net periodic pension expense for 2004, 2003, and 2002 included the following components:

|                                                  | Year Ended December 31,
|------------------------------------------------- | -----------------------
|                                                  |                        
|                                                  |                        
|Service cost-benefits earned during the period    |                        
|Interest cost on the projected benefit obligation |                        
|Expected return on plan assets                    |                        
|Net amortization and deferral                     |                        
|Net periodic pension expense                      |                        

Actuarial assumptions used to determine costs and benefit obligations are as follows:

|                                                    |  | 2004 |   | 2003 |   | 2002 |  
|--------------------------------------------------- |  | ---- | - | ---- | - | ---- | -
|Assumptions used to determine net pension expense:  |  |      |   |      |   |      |  
|Expected long-term rate of return on plan assets    |  | 7.50 | % | 8.00 | % | 8.50 | %
|Weighted Average discount rate                      |  | 6.25 | % | 6.75 | % | 7.25 | %
|Long-term rate of compensation                      |  | 3.50 | % | 4.00 | % | 4.50 | %
|                                                    |  |      |   |      |   |      |  
|Assumptions used to determine benefit obligation as |  |      |   |      |   |      |  
|of December 31:                                     |  |      |   |      |   |      |  
|Weighted Average discount rates                     |  | 6.00 | % | 6.25 | % |      |  
|Long-term rate of compensation increase             |  | 3.50 | % | 4.00 | % |      |  

The expected long-term rate of return assumption was developed through analysis of historical
market returns, current market conditions and the funds past experience.

Other Retirement Plans and Benefits

In addition to defined benefit plans, the Company makes contributions to defined
contribution plans and sponsors employee savings plans. The cost of these plans is included in the total cost for all plans reflected above.

10.    Other Comprehensive Income (Expense)

Other comprehensive income (expense) consists of the following:

|                                    | Year Ended December 31,
|----------------------------------- | -----------------------
|                                    |                        
|Change in market value of financial |                        
|instruments accounted for as hedges |                        
|Minimum pension liability           |                        
|Foreign currency translation        |                        
|                                    |                        
|Income tax  expense (benefit)       |                        
|                                    |                        

---



The components of accumulated other comprehensive income (expense), each presented net of
tax, are as follows:

|                                      |  |  |   | December 31, |   |   | December 31, |  
|------------------------------------- |  |  | - | ------------ | - | - | ------------ | -
|                                      |  |  |   | 2004         |   |   | 2003         |  
|Market value of financial instruments |  |  |   |              |   |   |              |  
|accounted for as hedges               |  |  | $ | 4,008        |   | $ | (2,638       | )
|Minimum pension liability             |  |  |   | (34,092      | ) |   | (28,170      | )
|Foreign currency translation          |  |  |   | (992         | ) |   | (638         | )
|                                      |  |  | $ | (31,076      | ) | $ | (31,446      | )

11.     Commitments and Contingent Liabilities

Certain of the Companys real properties and equipment are operated under lease agreements.
Rental expense under operating leases totaled $30,610, $30,541, and $26,882 for 2004, 2003 and 2002, respectively. Annual minimum payments under operating leases are $35,569,
$35,753, $32,795, $30,282, and $28,486 for 2005 through 2009, respectively. Future minimum lease payments under operating leases, reduced by minimum rentals from subleases
of $123,784, aggregate $166,194.

The Company has provided guarantees related to store leases for certain independent dealers
opening Company-branded stores (e.g., Thomasville Home Furnishings Stores). The guarantees range from one to fifteen years and generally require the Company to make
lease payments in the event of default by the dealer. In the event of default, the Company has the right to assign or assume the lease. The total future lease payments
guaranteed at December 31, 2004 were $94,530. The Company believes the risk of significant loss from these lease guarantees is remote.

The Company is or may become a defendant in a number of pending or threatened legal
proceedings in the ordinary course of business. In the opinion of management, the ultimate liability, if any, of the Company from all such proceedings will not have a
material adverse effect upon the consolidated financial position or results of operations of the Company and its subsidiaries.

12.     Other Income, Net

Other income, net for 2004, 2003 and 2002 consisted of interest on short-term investments and
notes receivable of $1,135, $718, and $1,220 and other miscellaneous income and expense items totaling $1,163, $2,764, and $2,536, respectively.

---



13.    Quarterly Financial Information (Unaudited)

Following is a summary of unaudited quarterly information:

|                              |  |  |   | Fourth  |  |   | Third   |  |   | Second  |  |   | First   | 
|----------------------------- |  |  | - | ------- |  | - | ------- |  | - | ------- |  | - | ------- | 
|                              |  |  |   | Quarter |  |   | Quarter |  |   | Quarter |  |   | Quarter | 
|Year ended December 31, 2004: |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Net sales                     |  |  | $ | 601,981 |  | $ | 574,800 |  | $ | 593,088 |  | $ | 677,561 | 
|Gross profit                  |  |  |   | 153,169 |  |   | 145,618 |  |   | 151,991 |  |   | 177,765 | 
|Net earnings                  |  |  | $ | 22,333  |  | $ | 19,423  |  | $ | 16,602  |  | $ | 33,209  | 
|                              |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Earnings per common share:    |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Basic                         |  |  | $ | 0.42    |  | $ | 0.36    |  | $ | 0.30    |  | $ | 0.59    | 
|Diluted                       |  |  | $ | 0.42    |  | $ | 0.36    |  | $ | 0.30    |  | $ | 0.58    | 
|                              |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Dividends declared per common |  |  | $ | 0.150   |  | $ | 0.125   |  | $ | 0.125   |  | $ | 0.125   | 
|share                         |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|                              |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Common stock price range:     |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|High                          |  |  | $ | 25.75   |  | $ | 25.37   |  | $ | 33.90   |  | $ | 35.09   | 
|Low                           |  |  | $ | 20.75   |  | $ | 21.10   |  | $ | 22.75   |  | $ | 28.15   | 
|                              |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Year ended December 31, 2003: |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Net sales (1)                 |  |  | $ | 634,423 |  | $ | 572,277 |  | $ | 596,359 |  | $ | 631,071 | 
|Gross profit                  |  |  |   | 159,835 |  |   | 139,547 |  |   | 148,821 |  |   | 166,573 | 
|Net earnings                  |  |  | $ | 22,612  |  | $ | 19,345  |  | $ | 23,575  |  | $ | 29,041  | 
|                              |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Earnings per common share:    |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Basic                         |  |  | $ | 0.41    |  | $ | 0.35    |  | $ | 0.42    |  | $ | 0.52    | 
|Diluted                       |  |  | $ | 0.40    |  | $ | 0.34    |  | $ | 0.42    |  | $ | 0.52    | 
|                              |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Dividends declared per common |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|share                         |  |  | $ | 0.125   |  |   | -       |  |   | -       |  |   | -       | 
|                              |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|Common stock price range:     |  |  |   |         |  |   |         |  |   |         |  |   |         | 
|High                          |  |  | $ | 29.42   |  | $ | 29.75   |  | $ | 28.89   |  | $ | 24.90   | 
|Low                           |  |  | $ | 22.75   |  | $ | 22.51   |  | $ | 19.00   |  | $ | 17.23   | 

|(1) | Amounts
reflect the reclassification of shipping revenues to net sales from cost
of operations. Amounts reclassified to
net sales for 2003 were $17,227, $16,747, $14,857 and $17,561 for the
first through the fourth quarter,
respectively. Shipping revenues included in 2004 were $19,030, $17,406,
$17,010 and $18,709, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Earnings per common share were computed independently for each of the quarters presented. The sum
of the quarters may not equal the total year amount due to the impact of computing average quarterly shares outstanding for each period.

In the fourth quarter of 2003, the Company commenced a cash dividend program with an initial
rate of $0.50 per common share on an annual basis. In the fourth quarter of 2004, the cash dividend was increased to an annual rate of $0.60 per common share. The closing
market price of the Companys common stock on December 31, 2004 was $25.05 per share.

---



Item 9.    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A.    Controls and Procedures

Disclosure controls and procedures

| | The Companys chief executive officer and chief financial officer have conducted an
evaluation of the Companys disclosure controls and procedures and have concluded
that the Companys disclosure controls and procedures were effective based on their
evaluation of these controls and procedures as of December 31, 2004.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Internal Control over Financial Reporting

|(a) |  | Management's Report on Internal Control over Financial Reporting
|--- |  | ----------------------------------------------------------------

| | The Companys management report on internal control over financial reporting as of
December 31, 2004 is set forth on page 53 and is incorporated herein by reference.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | Attestation
Report of the Independent Registered Public Accounting Firm
|--- |  | -----------------------------------------------------------------------

| | Managements report on internal control over financial reporting as of December 31, 2004 has been
audited by KPMG LLP, the independent registered public accounting firm that also audited
the Companys consolidated financial statements. KPMG LLPs attestation report
on the Companys internal control over financial reporting is set forth on page 54.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) |  | Changes in internal control over reporting.
|--- |  | -------------------------------------------

| | There was no change in the Companys internal control over financial reporting during the
Companys fourth fiscal quarter ended December 31, 2004 that has materially
affected, or is reasonably like to materially affect, the Companys internal control
over financial reporting.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



PART III

Item 10.    Directors and Executive Officers of the Registrant

The sections entitled Nominees and Section 16(a) Beneficial Ownership
Reporting Compliance of the Companys Definitive Proxy Statement for the Annual Meeting of Stockholders on April 28, 2005 are incorporated herein by reference.

Executive Officers of the Registrant

| |                       |     |                                            | Current   | Appointed 
| | --------------------- | --- | ------------------------------------------ | --------- | ----------
| | Name                  | Age | Position                                   | Positions | or Elected
| |                       |     |                                            |           |           
| | *Wilbert G. Holliman  | 67  | President of the Subsidiary -              |           | 1989      
| |                       |     | Action Industries, Inc.                    |           |           
| |                       |     | Chief Executive Officer of                 |           |           
| |                       |     | the Subsidiary - Action                    |           |           
| |                       |     | Industries, Inc.                           |           | 1994      
| |                       |     | Director                                   | X         | 1996      
| |                       |     | President                                  |           | 1996      
| |                       |     | Chief Executive Officer                    | X         | 1996      
| |                       |     | Chairman of the Board                      | X         | 1998      
| |                       |     |                                            |           |           
| | John T. Foy           | 57  | President and Chief Executive              |           |           
| |                       |     | Officer of the Operating Company -         |           |           
| |                       |     | Lane Furniture Industries, Inc.            |           | 1996      
| |                       |     | President                                  | X         | 2004      
| |                       |     | Chief Operating Officer                    | X         | 2004      
| |                       |     |                                            |           |           
| | Thomas G. Tilley, Jr. | 58  | President and Chief Executive              |           |           
| |                       |     | Officer of the Operating Company-          |           |           
| |                       |     | Thomasville Furniture Industries, Inc.     | X         | 2003      
| |                       |     |                                            |           |           
| | Dennis R. Burgette    | 57  | President and Chief Executive              |           |           
| |                       |     | Officer of the Operating Company -         |           |           
| |                       |     | Broyhill Furniture Industries, Inc.        | X         | 2000      
| |                       |     |                                            |           |           
| | Randall C. Spak       | 50  | President and Chief Executive Officer      |           |           
| |                       |     | Office of Operating Company -              |           |           
| |                       |     | Lane Furniture Industries, Inc.            | X         | 2004      
| |                       |     |                                            |           |           
| | C. Jeffrey Young      | 54  | President and Chief Executive              |           |           
| |                       |     | Officer of the Operating Company-          |           |           
| |                       |     | Drexel Heritage Furniture Industries, Inc. | X         | 2002      
| |                       |     |                                            |           |           
| | Seamus Bateson        | 54  | President and Chief Executive              |           |           
| |                       |     | Officer of the Operating Company-          |           |           
| |                       |     | Maitland-Smith Furniture Industries, Inc.  | X         | 1999      
| |                       |     |                                            |           |           
| | Stephen K. McKee      | 53  | President and Chief Executive              |           |           
| |                       |     | Officer of the Operating Company-          |           |           
| |                       |     | Henredon Furniture Industries, Inc.        | X         | 2004      
| |                       |     |                                            |           |           
| | Lynn Chipperfield     | 53  | General Counsel                            |           | 1993      
| |                       |     | Vice-President                             |           | 1996      
| |                       |     | Secretary                                  |           | 1996      
| |                       |     | Senior Vice President                      | X         | 2000      
| |                       |     | Chief Administrative Officer               | X         | 2000      

---



| | Denise L. Ramos   | 48 | Senior Vice President    | X | 2005
| | ----------------- | -- | ------------------------ | - | ----
| |                   |    | Treasurer                | X | 2005
| |                   |    | Chief Financial Officer  | X | 2005
| |                   |    |                          |   |     
| | Steven W. Alstadt | 50 | Controller               | X | 1994
| |                   |    | Chief Accounting Officer | X | 1994

_________________

*Member of the Executive Committee

There are no family relationships between any of the executive officers of the Registrant.

The executive officers are elected at the organizational meeting of the Board of Directors which follows the annual meeting
of stockholders and serve for one year and until their successors are elected and qualified.

Each of the executive officers has held the same position or other positions with the same employer during the past five
years, except Denise L. Ramos, who became Senior Vice President, Treasurer and Chief Financial Officer of the Company in 2005 and prior thereto was Chief Financial Officer of
the KFC division of YUM! Brands, Inc. and Senior Vice President and Treasurer of YUM! Brands, Inc.; C. Jeffrey Young who became President and Chief Executive Officer of Drexel
Heritage in 2002 and prior thereto was a participant in a joint venture now known as Fine Furniture Design and Marketing; Thomas G. Tilley, Jr., who became President and Chief
Executive Officer of Thomasville in 2003 and prior thereto held senior management posts with Masco Home Furnishings, Century Furniture Industries and La-Z-Boy Incorporated; and
Stephen K. McKee who became President and Chief Executive Officer of Henredon Furniture Industries, Inc. in 2004 and prior thereto was President and Chief Executive Officer of
Fine Furniture Direct, Inc. Fine Furniture Direct, Inc., doing business as The Home Company, filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy
Code on March 7, 2002.

Code of Corporate Conduct

The Company has adopted a code of business conduct for directors, officers (including the
Companys principal executive officer, principal financial officer and controller)and employees, known as the Code of Corporate Conduct. Stockholders may request a free
copy of the Code of Corporate Conduct from:

| | Furniture Brands International, Inc. | 
| | ------------------------------------ | 
| | 101 S. Hanley Road                   | 
| | St. Louis, MO 63105                  | 
| |                                      | 
| | Attn: Corporate Secretary            | 
| | 314-863-1100                         | 

Audit Committee and Audit Committee Financial Expert

The sections  entitled  "Board of Directors  and  Committees"  and  "Principal  Auditor Fees
and Services" of the Company's Proxy Statement for the Annual Meeting of Stockholders on April 28, 2005 are incorporated herein by reference.

Item 11.    Executive Compensation

The sections  entitled  "Executive  Compensation",  "Executive  Compensation and Stock Option
Committee Report on Executive  Compensation",  "Stock Options",  "Retirement  Plans",  "Incentive  Agreements" and "Performance  Graph" of the Company's  Definitive Proxy Statement for the Annual Meeting of Stockholders on April 28, 2005 are incorporated  herein by reference.

---



Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholders
Matters

The section entitled "Security  Ownership" of the Company's  Definitive Proxy Statement for
the Annual Meeting of Stockholders on April 28, 2005 is incorporated herein by reference.

Item 13.     Certain Relationships and Related Transactions

The section "Certain  Relationships  and Related  Transactions"  of the Company's  Definitive
Proxy Statement for the Annual Meeting of Stockholders on April 28, 2005 is incorporated herein by reference.

Item 14.    Principal Accountant Fees and Services

The section  "Principal  Auditor Fees and Services" of the Company's  Definitive  Proxy
 Statement for the Annual Meeting of Stockholders on April 28, 2005 is incorporated herein by reference.

---



PART IV

Item 15.    Exhibits and Financial Statement Schedules

(a)     List of documents filed as part of this report:

|1. | Financial Statements:
|-- | ---------------------

| | Consolidated balance sheets, December 31, 2004 and 2003
| | -------------------------------------------------------

| | Consolidated statements of operations for each of the years in the three-year period  ended December 31, 2004
| | -------------------------------------------------------------------------------------------------------------

| | Consolidated statements of cash flows for each of the years in the three-year period  ended December 31, 2004
| | -------------------------------------------------------------------------------------------------------------

| | Consolidated statements of shareholders' equity and comprehensive income for each of the
years in the three-year period ended December 31, 2004
| | -----------------------------------------------------------------------------------------------------------------------------------------------

| | Notes to consolidated financial statements
| | ------------------------------------------

| | Report of Independent Registered Public Accounting Firm
| | -------------------------------------------------------

|2. | Financial Statement Schedules:
|-- | ------------------------------

| | Valuation and qualifying accounts (Schedule II).
| | ------------------------------------------------

All other schedules are omitted as the required  information  is presented in the  consolidated  financial  statements or
related notes or are not applicable.

|3. | Exhibits:
|-- | ---------

The following exhibits are filed herewith or are  incorporated  by reference to exhibits  previously  filed with the SEC.
The Company shall furnish copies of exhibits for a reasonable fee (covering the expense of furnishing copies) upon request.

|3(a) |  | Restated  Certificate of  Incorporation of the Company,  as amended.  (Incorporated by reference
to Exhibit 3 (a) to Furniture  Brands  International,  Inc.'s  Quarterly Report on Form 10-Q for the quarter ended March 31, 2002)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3(b) |  | By-Laws
of the  Company  revised  and  amended to May 6, 1998.  (Incorporated  by  reference  to
 Exhibit 3(a) to Furniture  Brands  International,  Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31,
1998)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3(c) |  | Rights
 Agreement,  dated as of July 30,  1998,  between the  Company  and Bank of New York,  as
 Rights Agent.  (Incorporated  by reference to Exhibit 4 (b) to Furniture  Brands  International, Inc.'s Report on Form 10-Q
for the quarter ended June 30, 1998)
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3(d) |  | Certificate
of Designations,  Preferences and Rights of Series A Junior Participating  Preferred
                          Stock  of  the  Company.  (Incorporated  by  reference  to
 Exhibit  4(c)  to  Furniture  Brands                           International, Inc.'s
Report on Form 10-Q for the quarter ended June 30, 1998)
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



|4(a) |  | Credit
Agreement,  dated December 18, 2003, among the Company,  Broyhill  Furniture  Industries,
                          Inc., Drexel Heritage Furniture  Industries,  Inc.,  Henredon
Furniture  Industries,  Inc., Lane                           Furniture  Industries,
  Inc.,   Maitland-Smith  Furniture  Industries,   Inc.  and  Thomasville
                          Furniture Industries,  Inc. as Borrowers,  Various Lenders, The
Bank of Tokyo-Mitsubishi,  Ltd.,                           Chicago  Branch  and The  Bank
of New  York,  as  Co-Documentation  Agents,  Suntrust  Bank  and
                          Wachovia  Bank,  National  Association,  as  Co-Syndication
 Agents,  Deutsche Bank AG, New York                           Branch, as Administrative
 Agent, and Deutsche Bank Securities,  Inc., as Sole Lead Arranger and
                          Sole Book Manager  (Incorporated  by reference to Exhibit 4 to
Furniture  Brands  International,                           Inc.'s Report on Form 8-K,
dated January 21, 2004)
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(a) |  | Furniture
 Brands  International,  Inc.'s 1992 Stock Option Plan, as amended.  (Incorporated  by
                          reference  to  Exhibit  10 (a) to  Furniture  Brands
 International,  Inc.'s  Form  10-Q for the                           quarter ended March
31, 2000) *
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(b) |  | Furniture
  Brands   International,   Inc.'s  1999   Long-Term   Incentive   Plan,  as  amended.
                          (Incorporated  by  reference  to  Exhibit  4(f)  to  Furniture
 Brands   International,   Inc.'s                           Registration Statement on
Form S-8, File No. 333-100133) *
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(c) |  | Form
of Stock  Option  Grant Letter  (Incorporated  by  reference to Exhibit  10(b) to
Furniture                           Brands International, Inc.'s Current Report on Form
8-K, dated February 2, 2005)*
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(d) |  | Form
of Restricted  Stock Grant Letter  (Incorporated by reference to Exhibit 10(c) to
Furniture                           Brands International, Inc's. Current Report on Form
8-K, dated February 11, 2005)*
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(e) |  | Form
 of   Indemnification   Agreement   between  the  Company  and  the  Company's
  directors.                           (Incorporated  by reference to Exhibit  10(c) to
Furniture  Brands  International  Inc.'s Annual                           Report on Form
10-K for the year ended December 31, 2001) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(f) |  | Written
description of bonus plan for management  personnel of Lane Furniture  Industries,  Inc.
                          (Incorporated  by reference to Exhibit 10(e) to Furniture
 Brands  International,  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 1994) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(g) |  | Furniture
Brands  International,  Inc.  Restricted Stock Plan for Outside Directors,  dated as of
                          July 29, 1997.  (Incorporated  by reference to Exhibit 10(e) to
Furniture  Brands  International,                           Inc. Annual Report on Form
10-K for the year ended December 31, 2002) *
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(h) |  | Retirement
 Plan for  directors.  (Incorporated  by  reference  to Exhibit  10 (g) to  Furniture
                          Brands International, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1994) *
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(i) |  | First
Amendment to Retirement Plan for Directors.  (Incorporated  by reference to Exhibit 10
(e)                           to  Furniture  Brands  International,  Inc.'s  Annual
 Report  on Form  10-K for the year  ended                           December 31, 1994) *
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(j) |  | Furniture
Brands  International,  Inc. Executive Incentive Plan, as amended on October 25, 2001.
                          (Incorporated  by reference to Exhibit  10(g) to Furniture
 Brands  International  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 2001) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(k) |  | Broyhill
Furniture  Industries,  Inc. Executive  Incentive Plan, as amended on January 24, 2002.
                          (Incorporated  by reference to Exhibit  10(h) to Furniture
 Brands  International  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 2001) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



|10(l) |  | Thomasville
 Furniture  Industries,  Inc.  Executive  Incentive  Plan, as amended on January 24,
                          2002.  (Incorporated  by reference to Exhibit  10(i) to
Furniture  Brands  International  Inc.'s                           Annual Report on Form
10-K for the year ended December 31, 2001) *
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(m) |  | Henredon
 Furniture  Industries,   Inc.  Executive  Incentive  Plan,  dated  January  24,  2002.
                          (Incorporated  by reference to Exhibit  10(j) to Furniture
 Brands  International  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 2001) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(n) |  | Drexel
Heritage Furniture  Industries,  Inc.  Executive  Incentive Plan, dated January 24, 2002.
                          (Incorporated  by reference to Exhibit  10(k) to Furniture
 Brands  International  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 2001) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(o) |  | Maitland-Smith
 Furniture  Industries,  Inc.  Executive  Incentive Plan, dated January 24, 2002.
                          (Incorporated  by reference to Exhibit  10(l) to Furniture
 Brands  International  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 2001) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(p) |  | Form
of Executive  Incentive Plan Grant Letter to Company executives  (Incorporated by
reference                           to Exhibit 10(a) to Furniture  Brands  International,
 Inc.'s  Current Report on Form 8-K, dated                           February 2, 2005) *
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(q) |  | Form
of Executive Incentive Plan Grant Letter to Operating Company Executives. *
|----- |  | --------------------------------------------------------------------------------

|10(r) |  | Employment
 Agreement,  dated as of  January  1,  2000,  between  the  Company  and  Wilbert  G.
                          Holliman.  (Incorporated  by  reference  to Exhibit 10 (j) to
 Furniture  Brands  International,                           Inc.'s Annual Report on Form
10-K for the year ended December 31, 1998) *
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(s) |  | Employment
 Agreement,  dated as of  February  10,  2004,  between  the Company and John T. Foy.
                          (Incorporated by reference to Exhibit 10 (o), to Furniture
Brands  International,  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 2003) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(t) |  | Employment
 Agreement,  dated as of August 1, 1996,  between the Company and Lynn  Chipperfield.
                          (Incorporated  by reference to Exhibit 10 (c) to Furniture
Brands  International,  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 1996) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(u) |  | Employment
 Agreement,  dated as of August 1, 1996,  between the  Company  and David P.  Howard.
                          (Incorporated  by reference to Exhibit 10 (d) to Furniture
Brands  International,  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 1996) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(v) |  | Employment
 Agreement,  dated as of  February  7, 2005,  between the Company and Denise L. Ramos
                          (Incorporated  by reference to Exhibit 10(a) to Furniture
Brands  International,  Inc.'s Current                           Report On Form 8-K,
dated February 11, 2005) *
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(w) |  | Employment
 Agreement,  dated as of January 1, 2000, between the Company and Dennis R. Burgette.
                          (Incorporated  by reference to Exhibit 10 (p) to Furniture
Brands  International,  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 1998) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(x) |  | Employment
 Agreement,  dated as of April 16, 2004, between  Thomasville  Furniture  Industries,
                          Inc.  and Thomas G.  Tilley,  Jr.  (Incorporated  by  reference
 to Exhibit 10 (s), to Furniture                           Brands International, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 2003) *
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



|10(y) |  | Employment
 Agreement,  dated as of February 13, 2004, between Lane Furniture  Industries,  Inc.
                          and  Randall  C. Spak.  (Incorporated  by  reference  to
Exhibit  10 (t),  to  Furniture  Brands                           International, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 2003) *
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(z) |  | Form
of  Agreement  Not To Compete  between  the  Company  and  Wilbert G.  Holliman,  Dennis
R.                           Burgette,  John T. Foy,  David P.  Howard,  and Randall C.
Spak  (Incorporated  by  reference to                           Exhibit 10 (r) to
Furniture  Brands  International,  Inc.'s  Annual  Report on Form 10-K for the
                          year ended December 31, 1998) *
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(aa) |  | Furniture
 Brands  Supplemental  Executive  Retirement  Plan,  dated  as  of  January  1,  2002.
                          (Incorporated  by reference to Exhibit 10(v) to Furniture
 Brands  International,  Inc.'s Annual                           Report on Form 10-K for
the year ended December 31, 2002) *
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(bb) |  | Broyhill
Furniture  Industries,  Inc.  Supplemental  Retirement Income Plan, dated as of October
                          31,  2001.  (Incorporated  by  reference to Exhibit  10(w) to
 Furniture  Brands  International,                           Inc.'s Annual Report on Form
10-K for the year ended December 31, 2002) *
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(cc) |  | Lane
Furniture Industries,  Inc. Supplemental  Executive Retirement Plan, dated as of January
1,                           2003.  (Incorporated  by reference to Exhibit 10(x) to
Furniture  Brands  International,  Inc.'s                           Annual Report on Form
10-K for the year ended December 31, 2002) *
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(dd) |  | Form
of Deferred Executive  Compensation  Agreement  (Incorporated by reference to Exhibit
10(a)                           to Furniture Brands International, Inc.'s Current Report
on Form 8-K, dated December 9, 2004) *
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(ee) |  | Form
of Cash Option Deferred  Executive  Compensation  Agreement  (Incorporated  by reference
to                           Exhibit 10 (b) to Furniture  Brands  International,  Inc.'s
 Current  Report on Form 8-K,  dated                           December 9, 2004). *
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10(ff) |  | Form
of Long-Term  Performance Cash Bonus Letter  (Incorporated by reference to Exhibit 10(c)
to                           Furniture Brands International, Inc.'s Current Report of
Form 8-K, dated December 9, 2004) *
|------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|14 |  | Code
of Corporate  Conduct  (Incorporated  by reference to Exhibit 14 to Furniture Brands
 International,  Inc.'s                           Annual Report of Form 10-K for the year
ended December 31, 2003).
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21 |  | List
of Subsidiaries of the Company
|-- |  | -----------------------------------

|23 |  | Consent
of Independent Registered Public Accounting Firm
|-- |  | --------------------------------------------------------

|31 |  | Certifications
of W.G.  Holliman,  Chief Executive Officer of the Company,  and Denise L. Ramos,
                          Chief  Financial  Officer  of the  Company,  Pursuant  to Rule
 13a-14(a)/15d-14(a),  as Adopted                           Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|32 |  | Certifications
of W.G.  Holliman,  Chief Executive Officer of the Company,  and Denise L. Ramos,
                          Chief  Financial  Officer  of the  Company,  Pursuant  to 18
U.S.C.  Section  1350,  as  Adopted                           Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

*Indicates management contact or compensatory plan, contract or arrangement

---



|(a) | Reports on Form 8-K.
|--- | --------------------

| | A Form
8-K was filed on November 1, 2004 announcing an increase in the Company's  dividend rate
to $0.60 per               common  share on an  annual  basis and  announcing  third
 quarter  and nine  month  operating  results  and               projections  for the
fourth  quarter of 2004  earnings  per share.  A Form 8-K was filed on December 9, 2004
              affirming earlier projections for the fourth quarter of 2004 and reporting
material  definitive  agreements.               A Form 8-K was filed on  February  1,
2005  announcing  fourth  quarter  and full  year  operating  results,
              projections for the first quarter of 2005, the resignation of David P.
Howard as  Vice-President,  Treasurer               and Chief Financial  Officer of the
Company,  the  appointment of Denise L. Ramos as Senior  Vice-President,
              Treasurer  and Chief  Financial  Officer of the  Company  and the
 declaration  of the  Company's  quarterly               dividend.  A Form 8-K was filed
on February 2, 2005 reporting  material  definitive  agreements.  A Form 8-K
              was filed on February  11, 2005  reporting  an  employment  agreement  with
Denise L. Ramos.  A Form 8-K was               filed on March 7, 2005 updating
projections for the first quarter of 2005.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---



FURNITURE BRANDS INTERNATIONAL, INC. AND SUBSIDIARIES

Index to consolidated Financial Statements and Schedules

|                                                                                     |  | Page | 
|------------------------------------------------------------------------------------ |  | ---- | 
|Consolidated Financial Statements:                                                   | 
|                                                                                     | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                         |  | 26   | 
|                                                                                     | 
|Consolidated Statements of Operations for each of the years in the three-year period |  |      | 
|ended December 31, 2004                                                              |  | 27   | 
|                                                                                     | 
|Consolidated Statements of Cash Flows for each of the years in the three-year period |  |      | 
|ended December 31, 2004                                                              |  | 28   | 
|                                                                                     | 
|Consolidated Statements of Shareholders' Equity  and Comprehensive Income for        |  |      | 
|each of the years in the three-year period ended December 31, 2004                   |  | 29   | 
|                                                                                     | 
|Notes to Consolidated Financial Statements                                           |  | 30   | 
|                                                                                     | 
|Financial Statement Schedule                                                         |  | 46   | 
|                                                                                     | 
|Report of Independent Registered Public Accounting Firm                              |  | 54   | 
|                                                                                     | 
|Consolidated Financial Statement Schedules:                                          |  |      | 
|                                                                                     | 
|Schedule                                                                             |  |      | 
|                                                                                     | 
|Valuation and qualifying accounts   
                                  II            |  | 52   | 

---



Schedule II

FURNITURE BRANDS INTERNATIONAL, INC. AND SUBSIDIARIES Valuation and Qualifying Accounts

|                                | (Dollars in Thousands)
|------------------------------- | ----------------------
|                                |                       
|                                |                       
|                                |                       
|Description                     |                       
|                                |                       
|Year Ended December 31, 2004    |                       
|Allowances deducted from        |                       
|receivables on balance sheet:   |                       
|Allowance for doubtful accounts |                       
|Allowance for cash discounts/   |                       
|chargebacks/other               |                       
|                                |                       
|Year Ended December 31, 2003    |                       
|Allowances deducted from        |                       
|receivables on balance sheet:   |                       
|Allowance for doubtful accounts |                       
|Allowance for cash discounts/   |                       
|chargebacks/other               |                       
|                                |                       
|Year Ended December 31, 2002    |                       
|Allowances deducted from        |                       
|receivables on balance sheet:   |                       
|Allowance for doubtful accounts |                       
|Allowance for cash discounts/   |                       
|chargebacks/other               |                       
|                                |                       

(a)    Uncollectible accounts written off, net of recoveries.

(b)     Cash discounts taken by customers and claims allowed to customers.

See accompanying Report of Independent Registered Public Accounting Firm.

---



Managements Report
on Internal Control Over Financial Reporting

Management of Furniture Brands
International, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act
of 1934 Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we
conducted an evaluation of the effectiveness of the Companys internal control over financial reporting as of December 31, 2004 as required by the Securities Exchange Act of
1934 Rule 13a-15(c). In making this assessment, we used the criteria set forth in the framework in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control-Integrated Framework our management concluded that
our internal control over financial reporting was effective as of December 31, 2004.

Our managements assessment of
the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by KPMG LLP, an independent registered public accounting firm, as stated
in their report which is set forth on page 54.

Furniture Brands International, Inc.

St. Louis, MissouriMarch
11, 2005

---



Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders Furniture Brands International, Inc.:

We
have audited managements assessment, included in the accompanying Managements
Report on Internal Control over Financial Reporting, that Furniture Brands International,
Inc. maintained effective internal control over financial reporting as of December 31,
2004, based on the criteria established in Internal ControlIntegrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). The Companys management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express an opinion on
managements assessment and an opinion on the effectiveness of the Companys
internal control over financial reporting based on our audit.

We
conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, evaluating managements
assessment, testing and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
companys internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the financial statements.

Because
of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

In
our opinion, managements assessment that Furniture Brands International, Inc.
maintained effective internal control over financial reporting as of December 31, 2004,
is fairly stated, in all material respects, based on the criteria established in Internal
ControlIntegrated Frameworkissued by COSO. Also, in our opinion, Furniture
Brands International, Inc. maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2004, based the on the criteria
established in Internal ControlIntegrated Frameworkissued by COSO.

We
also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Furniture Brands
International, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related
consolidated statements of operations, shareholders equity and comprehensive
income, and cash flows for each of the years in the three-year period ended December 31,
2004, and our report dated March 11, 2005 expressed an unqualified opinion on those
consolidated financial statements.

/s/ KPMG LLP St. Louis, MissouriMarch 11, 2005

---



Report of Independent Registered Public Accounting Firm

The Board of Directors
and ShareholdersFurniture Brands International, Inc.:

We
have audited the accompanying consolidated balance sheets of Furniture Brands
International, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related
consolidated statements of operations, shareholders equity and comprehensive
income, and cash flows for each of the years in the three-year period ended December 31,
2004. In connection with our audits of the consolidated financial statements, we have
also audited the accompanying financial statement schedule. These consolidated financial
statements and financial statement schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of Furniture Brands International, Inc. and
subsidiaries as of December 31, 2004 and 2003, and the results of their operations and
their cash flows for each of the years in the three-year period ended December 31, 2004,
in conformity with U.S. generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

We
also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the effectiveness of internal control over financial
reporting of Furniture Brands International, Inc. as of December 31, 2004, based on the
criteria established in Internal ControlIntegrated Frameworkissued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report
dated March 11, 2005 expressed an unqualified opinion on managements assessment of,
and the effective operation of, internal control over financial reporting.

/s/ KPMG LLP St. Louis, Missouri March 11, 2005

---



SIGNATURES

Pursuant
to the requirements of Section 13 of 15 (d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

| |    | Furniture Brands International, Inc.
| | -- | ------------------------------------
| |    | (Registrant)                        
| |    |                                     
| | By | /s/ Wilbert G. Holliman             
| |    | Chairman of the Board               

Date:    March 11, 2005

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
indicated on March 11, 2005.

|Signature                 | Title                        
|------------------------- | -----------------------------
|                          |                              
|                          | Chairman of the Board        
|/s/ Wilbert G. Holliman   | (Principal Executive Officer)
|Wilbert G. Holliman       |                              
|                          |                              
|/s/ John T. Foy           | Director and President       
|John T. Foy               |                              
|                          |                              
|/s/ Katherine Button Bell | Director                     
|Katherine Button Bell     |                              
|                          |                              
|/s/ John R. Jordan, Jr    | Director                     
|John R. Jordan, Jr        |                              
|                          |                              
|/s/ Donald E. Lasater     | Director                     
|Donald E. Lasater         |                              
|                          |                              
|/s/ Lee M. Liberman       | Director                     
|Lee M. Liberman           |                              
|                          |                              
|/s/ Richard B. Loynd      | Director                     
|Richard B. Loynd          |                              
|                          |                              
|/s/ Bob L. Martin         | Director                     
|Bob L. Martin             |                              
|                          |                              
|/s/ Aubrey B. Patterson   | Director                     
|Aubrey B. Patterson       |                              
|                          |                              
|/s/ Albert E. Suter       | Director                     
|Albert E. Suter           |                              

---



|Signature              | Title                              
|---------------------- | -----------------------------------
|                       |                                    
|                       | Senior Vice-President and Treasurer
|/s/  Denise L. Ramos   | (Principal Financial Officer)      
|Denise L. Ramos        |                                    
|                       |                                    
|                       | Controller                         
|/s/  Steven W. Alstadt | (Principal Accounting Officer)     
|Steven W. Alstadt      |